Why It Matters How Low your neighbors Go…………………….
Hardly a day goes by when you don’t see another story about the sad state of the nation’s real estate markets. From major newspapers such as the New York Times and the Wall Street Journal to your local small town rag, everyone seems to be lamenting the current and future state of the real estate markets. Leaving behind the arguments and blame for our current situation, let’s assess the effect that your neighbors have on you when they get ready to sell their home.
Let’s say that in Anytown USA there are 3 homes of similar size, location and condition available for $300,000 in the same neighborhood. Seller A is not highly motivated to sell but is thinking of a bigger home for the family, Seller B is getting transferred and needs to sell but is not desperate and Seller C has racked up $35,000 in credit card debt and is about to enter foreclosure because they can’t make the payments on the first and second mortgages on their home and keep up with the mounting car payments and credit card debt. Seller C decides to list their home at $285,000 to be sure that if an interested buyer enters the neighborhood, Seller C’s home will be the first to go. Three months go by and none of the sellers have had any offers, and Seller C is getting panicky about making payments on next months bills. Seller C drops their price to $250,000 and feels confident the property will move quickly. Another month goes by and still the home has not received any offers. Seller C misses a car payment and is late on the mortgage and then decides to lower the price to $225,000 in hope of a cash buyer and a quick close. Two weeks go by and finally a buyer appears. The buyer offer $199,000 and the seller accepts the offer out of desperation. How does this affect the value of the properties of Sellers A and B? Even if they do procure buyers at or near their current list price of $300,000, the property will likely not appraise since the last sale in the neighborhood was for $199,000. It can be said that there were extreme circumstances surrounding the sale of Seller C’s home but the negative pressure it placed on the market and the amount of time that it took to sell now affects everyone in the neighborhood who is looking to sell. If a foreclosure is eminent, the picture only looks worse. Check out Eagle County Public Trustee’s website for the latest foreclosure information in the county at http://www.eaglecounty.us/publicTrustee/foreclosure.cfm.
There is more to selling a home than the price, although most professionals would argue that price is the most important factor. For information about how to possibly avoid the foreclosure process, please call me or visit my website at http://www.investinvail.com/
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