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Will This Affect the Resale Value of My House-Foreclosures

Last week my Will This Affect the Resale Value of My Home post looked at the issue with power lines and water towers as possible issues with the resale value of your home.  This week we are going to look at a serious issue in many Northern Virginia neighborhoods, foreclosures and how they may affect the value of your home.

Foreclosure House

Foreclosures vary from community to community.  In some areas you might not be able to tell a home is in foreclosure from any other for sale in the neighborhood.  In others you may find signs that announce the property is a foreclosure or see homes that who obvious signs of neglect.

So how do you know whether a foreclosure in your neighborhood is affecting the value of your property?  One of the key components of determine the value of your home when it is being sold is a professional appraisal.  In a neighborhood where foreclosures are few and far between the chances are an appraiser will not need to use a property that has sold as a foreclosure as a comparable property and there won't be any issue.  However in a  neighborhood where there have been a number of foreclosures, appraisers have to include those sales in their comps.  Most appraisers will try and discount the value of a foreclosure property but where they are a majority of the sales in the neighborhood then they will affect the value of your home.

If you live in one of the areas where there are a large amount of foreclosures you can expect to see a slight drop in your value.  It may not always be about lower prices but also about buyer's feelings about the area.  If they perceive the area is showing signs of neglect they will automatically discount the value of your property even if it is in top shape and you will need to make a tough decision about pricing your home to reflect an issue you have no control over.

A secondary affect of foreclosures in areas with HOA and condo associations is the impact of the uncollected dues and fees on current homeowners.  Usually before a property goes into foreclosure the owners stop paying their monthly HOA or condo assessments.  Over time depending on the number of unit in distress the association's budgets can take a hit and current owners may end up being tasked with making up the shortfall.   As a result association fees rise and that increase in fees may make a property less desirable to a future buyer.  Condo buildings are at the highest risk for lower values due to foreclosures as they are often the only comps an appraiser can use.

Foreclosures can affect the value of your home and you need to be aware of what is going on in your neighborhood.  A professional Realtor® is the best source of information on how many foreclosures are currently in your neighborhood, how many have sold and current strategies for getting your home SOLD in today's market.

More information on Northern Virginia Foreclosures

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Cindy Jones

As an Associate Broker with RE/MAX Allegiance in Northern Virginia and native of the area I can assist you whether you are buying, selling or renting a home anywhere in Northern Virginia. For more information about the area or my services you can check VaRealEstateTalk or my Northern Virginia website.

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If you are interested in learning more about the Northern Virginia Real Estate market including Alexandria, Arlington, Fairfax and Prince William Counties give Cindy Jones and Integrity Real Estate Group a call at 703-346-2213.

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Check out www.varealestatetalk.com and www.cjrealtygroup.com for more information.

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Comment balloon 10 commentsCindy Jones • February 14 2008 03:29PM

Comments

All good points Cindy, thanks.
Posted by Eugene Jones (Weichert Realtors) over 10 years ago
I have a relo client in Detroit now who is having real issues because of foreclosures.
Posted by Pat Fenn (Marketing Specialist for CJ Realty Group/Cindy Jones Broker ) over 10 years ago
Eugene-thanks for stopping by.
Posted by Cindy Jones, Pentagon, Fort Belvoir & Quantico Real Estate News (Integrity Real Estate Group) over 10 years ago
Pat-yes Detroit is one of those areas that has been hit hard in the last year.  Hope your clients can make a deal.
Posted by Cindy Jones, Pentagon, Fort Belvoir & Quantico Real Estate News (Integrity Real Estate Group) over 10 years ago

Cindy,

Enjoyed your post--you're right on with  your information. 

Posted by Diane Bell, Hilton Head Real Estate, Bluffton (Charter 1 Real Estate, Hilton Head, Bluffton, SC) over 10 years ago
Diane-Thanks for your comment.  I'm sure there are other areas facing the same issues.
Posted by Cindy Jones, Pentagon, Fort Belvoir & Quantico Real Estate News (Integrity Real Estate Group) over 10 years ago
This is becoming more true in Prince William County.  I am telling my sellers now that they have to compete with the foreclosures.  Whereas, six months ago that was not the case.
Posted by Chelle Gassan, NOVA Realtor and Stager (RE/MAX Regency and Staged Homes VA) over 10 years ago
Eventually, foreclosures can cause an even greater decline in prices.  The neighborhood starts to blight with uncut lawns, homes in disrepair, vandalism, crime, there are loads of ways it effects property values.
Posted by Jim Crawford, Jim Crawford Atlanta Best Listing Agents & REALTOR (RE/MAX Paramount Properties) over 10 years ago
Chelle-PW has some significant issues.  I pulled comps in a neighborhood yesterday for a BPO with 58 properties listed and 3/4 of those were either short sales or foreclosures.  I posted a blog a while back about the Tale of Three Houses that talked about one neighborhood and the choices a buyer had to make and it is a lesson for sellers as well.
Posted by Cindy Jones, Pentagon, Fort Belvoir & Quantico Real Estate News (Integrity Real Estate Group) over 10 years ago
Jim-we are starting to see some of that in neighborhoods in our area.
Posted by Cindy Jones, Pentagon, Fort Belvoir & Quantico Real Estate News (Integrity Real Estate Group) over 10 years ago

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