Home Buying in Charlotte>Question Details

amerjan,  in Charlotte, NC

Do appraisers include foreclosure and auction sales as comps when pricing a property ?

Asked by amerjan, Charlotte, NC Sat Jan 19, 2013

I am in the processing of purchasing an investment property in the Kingstree neighborhood (28215). The property is owner financed and the seller and I are a way way apart on the price. So we're going to let the appraised value be the guide. There have been a number of foreclosures in the area and I was wondering if they would depress the price. Also, if anyone has an idea about current market rents for a 3/2 single family homes in 28215, I would like to know. Thank you.

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Dennis Fessel’s answer
Just had the same conversation with a couple Licensed appraisers in the Charlotte, NC area. There was a time they would throw out the distressed properties when appraising, but nowadays they can and do use them. The general answer I have received from the appraisers is that they have to use the sold properties that are "Most Like" the Subject property. Therefore, if the properties they find most like the subject are Short Sales or Foreclosures, they will use them as comps.
1 vote Thank Flag Link Mon Jan 21, 2013
Here is a summary of all activity in Kingstree from the last 12 months. http://goo.gl/gvxKv and details of the same properties http://goo.gl/hB8kl An appraiser would likely pull comparable sales from these homes. If you want a recommendation on an appraiser, please contact through profile. Trulia has some good rent info on their rent tab. If you appreciate an answer, please give thumbs up. For the most helpful answer, please say thanks with a best answer click.
1 vote Thank Flag Link Sat Jan 19, 2013
A bank hiring an appraiser and a person hiring an appraiser could come out with a different value depending on the guidelines they are given. Most banks when hiring an appraiser will not let the appraiser use any short sales are there are no guidelines or standards for a short sale and sales prices often do not reflect true market value. As far as bank owned sales, one would usually not use any bank owned comps unless bank owned sales are the predominate type of sale in a neighborhood.
0 votes Thank Flag Link Mon Jan 21, 2013
It is true; some houses are selling for 40% of what they were worth 5 years ago.
Distressed sales can account for 80% of the Market in some areas;
In that case, Appraisers cannot ignore REO's and Shortsales; they ARE the Market.

Find solice in the fact that most DISTRESSED houses are in need of Repairs or Updating, or both and Buyers should take this into consideration.
0 votes Thank Flag Link Sat Jan 19, 2013
I sold a home in Kingstree about a year and a half ago. The owners were relocating so it was a regular re-sale. The appraiser did not use any foreclosured or distressed sales for comparable solds. He used one home in Kingstree, one in Cambridge and one in Bradfield Farms for his comps. He did make a downward adjustment for the other two neighborhoods as he said the average sales price per square foot was higher. If you are buying a home as an investment, I would hope that you can get it below market value. That should always be the general rule when buying investment properties. However, I do know that seller financing has its advantages.

I do property management too and the rental price will depend on the square footage price and whether it has a one or two car garage.

Good luck!

April Crowder
Coldwell Banker United, REALTORS
0 votes Thank Flag Link Sat Jan 19, 2013
An appraiser can use any comps he wants, which seems very unfair. We have not experienced an appraiser using FC or Short Sales on amy of our recent closings/appraisals for our homes we have closed on. To be fair In your situation, both the seller & you should agree on comps not in FC or Short Sale to come up with a price.. If there are no comps that have sold regularly, than that's another thing. But to be fair to both, you should use normal "Sold" properties,
0 votes Thank Flag Link Sat Jan 19, 2013
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