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Badgerbob, Home Owner in 60640

Live in 6 unit condo building. Only allow 1 rental and it is currently rented. One unit may go into foreclosure - what does that do to our value?

Asked by Badgerbob, 60640 Sat Apr 21, 2012

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Values will likely be negatively affected. Look at values in your building and then similar sized units within 1/2 mile
0 votes Thank Flag Link Sun Apr 22, 2012
It all depends on the status of the other units, HOA status, as well as other factors. Have you had an experienced agent do a market analysis for you on your condos?

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0 votes Thank Flag Link Sun Apr 22, 2012
That is exactly what happens when homeowner associations limit rentals in a market where homeowners have lost equity. By limiting the number of units that can be leased the homeowners association is in effect forcing unit owners that have a hardship into foreclosure. If the unit was rented most likely assessments would be paid and values would not decline as rapidly. The most significant comparable value is usually the last sale in the building.
0 votes Thank Flag Link Sun Apr 22, 2012
Well it will bring it down, but it depends on the area. Is it one of the few foreclosures in the area? Has your area been slammed by these? This can all factor into how much this will hurt the value.
0 votes Thank Flag Link Sun Apr 22, 2012
It depends if the other units were sold within the last 12 months . If not then it will go on what has sold in the last 12 months in your neighborhood . If you live in a neighborhood with a lot of foreclosure activity then it will affect you Please keep in mind you home will not be worth what you paid regardless . The value may just not dropped that much or could have dropped drastically it simply just depends . Best thing thing to do is get a free CMA . I can provide you one if you like please contact me at diana@ findingourbalance.com.
0 votes Thank Flag Link Sat Apr 21, 2012
It is hard to say what affect the foreclosure will have on values? I guess it depends on where your building is located and condition iof unit and length of time to sell. Your association should be prepared to not receiving assessments for the unit until it gets sold and only then your only go to get payments from date deed was recorded and 6 months prior from buyer
0 votes Thank Flag Link Sat Apr 21, 2012
The extent to which the foreclosure affects the value of your unit is unclear and depends on a few things like is the forecloure unit the same as yours or different? If the foreclosure is a 1st floor duplex down and yours is a top floor or top floor duplexed up then it is not a good comparable. If there are many other foreclosures in your immediate neighborhood similar to your unit than it is a negative.
If you are not planning to sell for more than 1 year do not worry about it because appraisers and buyers do not go back more than12 months. Appraisers do not go back more than 6 months and this market has started to change. If you are more concerned have a few agents do a market analysis of your unit to give you a range of value.
1 rental in a 6 unit building is not an issue. Lenders have started to relax their previously rigid requirements one of which had to do with the % of owner occupancy. Now, if the buyer is planing to live in the unit, the lenders do not care too much about owner occupancy. If the buyer is an investor, those loans do care about owner occupancy, yet 1 is still not an issue.
0 votes Thank Flag Link Sat Apr 21, 2012
Unfortunately it will directly affect your units value due to it being the closets and most similar comp available once is sells. Being under foreclosure may not have an immediate affect unless it affects the HOA thus affecting the availability to finance units in the building but when it sells it will affect your units value.
0 votes Thank Flag Link Sat Apr 21, 2012
Hey Bob,

Hope you're having a great weekend and enjoying the weather!

Rental restrictions are becoming much more common in today's real estate market mainly because lenders/banks have a lot more restrictions in granting mortgages in condo buildings. If a building has too many rental units it just adds up to be more of a risk to the respective bank. Banks don't like risk! With that said, if you must sell your home and your building is at the rental limit you don't have much of an option aside from your building changing the rules.

If one unit goes into foreclosure it will definitely impact your home's value, especially if the home going into foreclosure is the exact same as yours (in finishes, layout, size, etc.) Just think of it this way: If you were a Buyer and you noticed that your home is priced at $200,000 but the foreclosed home sold at $150,000 and it's the exact same as yours, there is no reason why a Buyer would willingly pay the additional $50,000 just because yours was not a foreclosure.

Hope this helps! If you want a bit more insight or want to chat about real estate I'm always available via email and by phone.

Jeff Stewart
REALTOR®, @properties
3101 N. Greenview Avenue, Chicago, IL 60657
309-269-3499 CELL | 773-305-0480 FAX
jeffstewart@atproperties.com
0 votes Thank Flag Link Sat Apr 21, 2012
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