Comps are killing the possible sell of my house.........

[tim2]

All of the sells this year in my subdivision have been foreclosures.  Now there are no more forclosures but just wondering how the values in the subdivision will ever rebound seeing that the appraisals will always look at the recent sells.   For example,  the next house that sells will look at the recent sells when the appraisal is done, right?  It will never appraise higher than the last sell so how will the prices ever go up?

[Trondul]

When the market turns around there will be more buyers than sellers and sales will go into multiple offer situations (buyers trying to outbid each other).  This will drive the price higher than the recent comps and in turn become the new comp.   Right now, at least where I am, there are way more sellers than buyers.  And truth be told, the banks are probably sitting on properties and dribbling them out a little at a time to keep from really flooding the market. That said, my agent told me he was starting to see some of his clients get into multi-offer situations and was honestly surprised that it didn't happen on the townhouse foreclosure that I'm closing on next week. 

[stan_the_man]

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@Trondul wrote:

When the market turns around there will be more buyers than sellers and sales will go into multiple offer situations (buyers trying to outbid each other).  This will drive the price higher than the recent comps and in turn become the new comp.   Right now, at least where I am, there are way more sellers than buyers.  And truth be told, the banks are probably sitting on properties and dribbling them out a little at a time to keep from really flooding the market. That said, my agent told me he was starting to see some of his clients get into multi-offer situations and was honestly surprised that it didn't happen on the townhouse foreclosure that I'm closing on next week. 

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The other two possibilities are:

1) A buyer paying cash

2) A buyer coming to the table with some cash, who is able to close the gap

Both those senarios would eliminate the comps problem for a buyer, and allow the comps to increase in price.

[Booner72]

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@Trondul wrote:

When the market turns around there will be more buyers than sellers and sales will go into multiple offer situations (buyers trying to outbid each other).  This will drive the price higher than the recent comps and in turn become the new comp.   Right now, at least where I am, there are way more sellers than buyers.  And truth be told, the banks are probably sitting on properties and dribbling them out a little at a time to keep from really flooding the market. That said, my agent told me he was starting to see some of his clients get into multi-offer situations and was honestly surprised that it didn't happen on the townhouse foreclosure that I'm closing on next week. 

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They were slowly dribbling houses out in my area, too.  When we were looking for a house we had a hard time finding any to look at. 

[chasmith]

Tax assessors will ignore foreclosure comps on the basis they aren't "arms length transaction between a willing buyer and a willing seller".  I would discuss this with one or more local reral estate agents to see if there are any steps you can take to get adjustments on appraisal.

[Booner72]

I didn't know the tax man gets to ignore the foreclosures.  But the appraiser can't ignore them.  Totally backward and unfair system to homeowners and buyers.

[GregB]

The appraiser uses the "best" comps available. If there aren't any recent "normal" sales, then he is forced to use foreclosures.

[Anonymous]

I have my house listed now, and most of the recent sells in my area are foreclosures. My agent did tell me they do not use those as comps, only normal sells. I had one that was recent in my area that was a normal sell, the rest were foreclosures and for sale by owner.. 

[Booner72]

There were 6 comps on my appraisal and 3 were foreclosures.

[GregB]

Appraisals have 3 comps that are used for detailed calculations. They also try to add 3 more comps to show that other house sales are similar but those are not used in the detailed calculations. You might look at this as coming up with 6 comps and then using the best three in the front section of the appraisal for detailed calculations.

This is the way it works in the two states of my experience. I suppose it could vary elsewhere.