Property Q&A in Swampscott>Question Details

Phil, Home Seller in Swampscott, MA

How can an unusually low sale price of a home effect the value of other homes in its surroundings?

Asked by Phil, Swampscott, MA Fri Aug 31, 2012

There was a recent sale of a home at 199 Aspen Rd for $284,900. It's a 3 bed, 1.5 bath, 2100 sq ft home that had been vacant for years and in need of extensive renovation. Once fixed, the house should assess for a higher value. Homes on this family friendly and highly sought after street tend to sell in the high 300s to mid 400s. It's a concern for neighbors that the listing of this sale, without the true detail of the homes conditions, will significantly lower home values on the street. What efforts are made by the town and real estate community to offset these types of sells to correct for the true value of the home after its been renovated?

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It will be important to note to any appraisers or realtors that it was a distressed sale if it is used as a comp for determining the value of your own or your neighbors properties. Not all appraisers are local, and unfortunately sometimes public record does not correctly reflect the actual condition of a property. Town assessors may not visit properties for years, so the towns assessment might not reflect the current value either. Hopefully the new owners will renovate and usually once permits are closed out the assessor will go in and determine a more current value.
0 votes Thank Flag Link Mon Mar 11, 2013
As a full time real estate professional I have been asked this question more than once. The true value of the home must be defined by the purpose. The town assessor will take notice, real estate profesionals who know the local market will definately know the intricacies you are describing, and good local appraisers will be aware of the neighborhood conditions vs this property.

Once the blighted property has been renovated, if it is resold, that will help the values. If it is held, the new condition will help values. If it is refinanced, that will also help values, although not as visibly as a sale.

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0 votes Thank Flag Link Fri Aug 31, 2012
Andrew answered and you have the explaination for why it sold so low.

If you or your neigbors try to sell or refinance, make sure the appraiser knows this information. A good appraiser should but it never hurts to tell them.
0 votes Thank Flag Link Fri Aug 31, 2012
If it is truly unusual it will have no impact. It becomes an issue when the unusually low sales price is not unusual. Meaning those low sales prices become the market and therefore the comparable sale.
0 votes Thank Flag Link Fri Aug 31, 2012
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