Market Conditions in Salinas>Question Details

John Sullivan, Other/Just Looking in Salinas, CA

Impact on value when a home is surrounded by Bank Owned homes?

Asked by John Sullivan, Salinas, CA Tue Feb 5, 2008

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I am an appraiser in the Monterey Bay area. I can't agree more with Rick. There are so many REO properties that I find most of my comps are REO properties. In some of our micro markets we are finding that there are so many REO listings that the buyers won't look at a higher priced homes when there are 10 of the same model for sale cheaper as REO's. There do not seem to be quite enough investors to absorb the shear number.
2 votes Thank Flag Link Mon Apr 28, 2008
John, In a normal market the occasional foreclosure sale would not greatly affect the value of other homes in the area, however, in this market where there are many REO's (bank owned properties) that have transacted, it sets the market price for the neighborhood because those are the values that are being paid. So the answer is a great impact in today's market.
2 votes Thank Flag Link Wed Apr 23, 2008
I was saddened to see one of the answers you received! He said "don't believe your listing agent"????? What a broad-based slap in the face? John, don't get 4 or 5 agents in to give you a price. HIre an agent by word of mouth and reputation. Any GOOD agent would price a house as accurately as possible. Pricing a house too high would result in it simply sitting there. As listing agents, our sign and name rider begins to look bad if it sits too long. If you find a good, reputable agent, he or she will do their homework and price your home to get sold. Like in any industry ... there are bad, incompetent people ... but there are plenty of smart, real estate agents out there overflowing with integrity!! Good luck!!!
2 votes Thank Flag Link Thu Feb 21, 2008
With all due respect John, if you give Dr. Cheng a moment of your time, you will be led very far astray!

There were several issues that I disagree with in his comment, however, I will pick one so as to keep this short.....Its great that they look out for each other in their condo community and that is certainly alot easier then in a tract home environment, but rarely does someone lose their home to foreclosure or have a "choice" to take it off the market and sit awhile or why would they be in default in the first place, rarely is it a CHOICE.

The impact of foreclosures is substantial for a conventional sellers and its sad, but a fact ,that sellers must compete with bank owned properties if they are choosing now to list their home. Also keep in mind that there is not an immediate end in sight, we are expected to be flooded this summer with foreclosures.

Another thing to keep in mind, it really is great time to buy and in my neck of the woods, bank owned homes are flying off the shelves with multiple offers. Ok, with that said, they are coming on the market just as quickly ~

Here, they have passed city ordinances that require banks to keep the property equal to the condition of the surrounding community. They are now being required to keep the lawns green, the weeds pulled and property free of trash so that will certainly help with impact here.

If you are "just looking' like your avitar mentions, you probably are more interested in whether you can write a lower price offer for a purchase. Do not hesitate in doing that; however the banks here, are really starting to price the homes aggressively so they go quick , and low balling will certainly have a large risk attached to it.
1 vote Thank Flag Link Thu Feb 21, 2008
Impact or not depends on if "you let it" or not. In most bank owned property, their condistion is NO good, so that hypothesis is NEVER happen. Why would greedy banks in this country listed a property below market price??? There got to be some kind of problem. Yes, I visited many bank owned properties, and that's my conclusion.

Don't try to believe your listing agent, at least, not 100%. Keep in mind, you always need to have 3 to 5 licensed agents to do "market analysis" for you and pick the "highest" one to list with due to the fact many listing agents would "cut your listing price" using whatever info s/he got but you do NOT. So, interview 3 to 5 agents would give you a better chance to meet honest realtor.

If you do not want your neighborhood to have any foreclosure home, you would want to do some "community service" to monitor your neighborhood and help introducing your neighbors as many prospective buyers as possible since most "foreclosured" property owners could have listing for sale for 6 months or more, so if you are a "concerned" neighbor, and help them sell during that time period, you shall NEVER see any foreclosure units ever pop up to impact you.

One way to help your neighbor's home sell while listing is to "pick up all the trashes along the neighborhood", and call township Health Dept to send inspectors to area where thousads of trashes hard to pick by yourself or your family. For the unkept lawn, you can pick up the lawn littered newspaper or salespaper for the seller, and get township to enforced if not for sale units.

For sale house, you may want to visit the seller and volunteer to mow their lawn or at least to help one or twice to keep up the local synergy.

In our neighborhood, we not only get the streets free of trash, we did a pick up every Sunday morning before realtor open houses in the area in afternoon, so the area has been so clean and prospective buyers love it and buy them right away.

We also went visit all open houses in the neighborhood and identify neighbors who may NOT have to sell and share with them the local real estate info, and pursuade them to take off market temporarily after others sold. e.g. during Thanksgiving to Xmas time, many just took off market, so that those who desperatedly need to sell sold faster.

Since we worked with all listing agent in the area, as soon as we know a house sold under contract, we persuade the owner to ask their listing agent "REMOVE" the for sale sign. If the listing agent insist to use the "false info" to attract other buyers, we will contact other sellers to call township mayor office to enforce. Many listing agents would at least place a "TOO LATE" or "just SOLD" label to their for sale signs, and that helps all others to sell.

So, it is "To Help or NOT to help" situation. If you do not help your neighbors while they were listing for sale, when they could not sell their unit in time and became foreclosure, they will come back to bite you ...

When I was invited to introduce hundreds of buyers to buy out a community, I often coordiate Community Open House to invite dozens of listing agents to hold open house for the condo/townhouse at the same Sunday afternoon. For those who can not coorporate, their signed would be REMOVED during the period by the contractors who were sent to clean the whole community, neighborhood streets, all the way to highway exits.

Legally, you can NOT remove others' sing, but technically you could since the contractors have to clean up the area to prepare for community open house, so all the signs wll be gone in Sunday morning, and after clean up, the realtors joining open houses would come to set their own signs with ballons so that all buyers respond to join marketing efforts and extra 1,000 flyers to prospective buyer communities will only see the units at the open house.

All the for sale signs would be restored after community open house, and the community often has 3 to 5 sold right after, so weeks later, the whole community would be very likely to be close to sold out except one or two overpriced units and may be newly listed.

I actually visited this Sunrise community http://cnj.craigslist.org/rfs/580348742.html weeks ago when I saw the ads, and I found this townhouse community has a rule which may be great for most condo and townhouse community. The community ONLY allow for sale sign, by owner or by agent, to be place during Sunday afternoon, 1 to 5pm. So many prospective buyers see to be allowed making buying decision independently, and the community has only 2 for sale as realtor.com shows ... http://www.realtor.com/search/searchresults.aspx?zp=07933&am…
1 vote Thank Flag Link Wed Feb 20, 2008
Impact is obvious when the house next door is in good condition and it's listed Bank Owned for 80,000K less.
Web Reference: http://WWW.SOLDBYJESSE.COM
1 vote Thank Flag Link Wed Feb 20, 2008
A forclosure home is considered comparable when it is sold and log into county records.
This is what my listing agent/prior position as a bank executive told me when a home in our neighborhood became a forclosure. You could seek out an appraisel of your home if you are considering selling at this time..
The other concern would be if all of those properties are left unkept (lawn not mowed, fliers hanging on door etc) and it impacts the way the neighborhood looks to prospective buyers.
Mary
1 vote Thank Flag Link Tue Feb 5, 2008
Many bank owned homes are slightly or seriously distressed. Do your best to make your house shine - it will stand out among the bank owned if the condition is significantly better and the appraisers and buyers will notice.
0 votes Thank Flag Link Tue Apr 12, 2011
John,

Try renting your home vs selling. If you absolutely need to sell, then your price will be impacted not only by the buyer but on the lender who they use and value the property.

Good luck
Colin
0 votes Thank Flag Link Tue Apr 12, 2011
Hello John and all the Trulia Voices,
I had an interesting conversation with our listing agent about our home that is for sale in the state of WA. The agent is going to petition that "short sale" homes be removed from the multiple listing service. The biggest problem is that the agents that have the "short sale" listings are not posting this information in the public remarks..only in the private comments. Truth in advertising goes out the window if a buyer thinks there are a large number of homes that can be purchased with no strings attached. The many short sales that are listed are not being sold even with multiple offers. The short sales are prevalent at all price points..one particular neighborhood called First Place should be renamed "Short" place with very high end homes facing forclosure.
Keep the conversation going..and seek out the best solutions for all seeking homes and want to be informed and involved citizens in their communities
Maryland with Mary in it
0 votes Thank Flag Link Mon May 12, 2008
Try not to worry about them. If they are way below market, they should sell fast. Then, when anyone tries to compare your property to them - we simply tell them it was a foreclosure and was way below market AND sold very quickly. They can look for foreclosures, but truly a lot of people don't even want to get involved with going after those. If they are a good deal, investors beat everyone to the punch with CASH. So no worries. Pay no attention to the man behind the curtain...
Web Reference: http://www.gmoylan.com
0 votes Thank Flag Link Wed Apr 23, 2008
Dear Debbie,

I am sorry that you felt sad; it was not meant to upset any licensed realtor. In fact, may be I should better phrase it as "Don't try to believe the agent trying to list your home..." My points have been described in various places, and the key is that "every realtor price a right price based on their marketing capability". There is NO abosolute value of a home, the value varies based on the buyer. And the better matched a buyer, the higher the value, and that match depending on the marketing capacity. And that often revealed by the suggested listing price.

Dear Lisa Forss,

I do not expect John or you to be able to understand what I described; it was a research work. In fact, most agents would not disagree with my invention since they were not able to sell many houses and blame only the real estate market.

For those who fully understand, they got gold medal of Million dollar club in 2006 and 2007. So for those who not yet obtain gold medal in 2006 and 2007, believe or not, that's why I spent time here trying to help hundreds of thousands of underperform realtors. Because if I can help them just to sell a few more houses more than they otherwise could, that would help millions of American families suffering on foreclosure.

My fundamental believe, and there are scientific data to support my belief, is that there are many more buyers out there eager to buy if you were able to find them a match home effectively. Current real estate practice is out dated.

Cheng
0 votes Thank Flag Link Wed Feb 27, 2008
Hey John!
The long and short of it is that is does impact in a negative way. Now if you need to sell NOW, you will have problems. If you can wait it out it will bounce back. Buying a house is not day trading. It is a long term investment. This is why mortgage rates are based on 15 - 20 - 30 - 40 - 50 year payback
0 votes Thank Flag Link Thu Feb 21, 2008
Appraisers take the sale conditions into consideration when using it as a comparable, just as the transfer of ownership from parents to children on the county records will be perceived differently than an "arms length" sale, AS-IS sales of any kind are also a different sale condition, cash sales, etc, even the fact that closing costs were credited is part of the total picture. It is important that all sales be recorded not only with the county but placed into the MLS even after the sale of a new home, the builder should be decent enough to put the sales information into the local mls to give the area the comparable sales information.
0 votes Thank Flag Link Wed Feb 20, 2008
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