If my neighbor is in foreclosure and the bank auctions the property how does this affect my property value?
Question:
Answer:
Unless you're behind in your payments, it should not affect your property at all. Appraisers will approximate the value of your property based upon recent sales in your area, but if they do their job correctly, auction sale prices should be ignored.
The sale gets calculated in, it will drop the value some. How much damage it does depends on how many other homes sell in the next few months, as well as the last few months. After 6 months this sale is no longer in the equation though, so long term it should not hurt you, only if you are selling soon.
Since one of the key valuators of property is similar property, the percieved value of your property will go down if the neighbour's property is sold for under market value or up if it goes for over market value. Just like it was sold privately.
This does not take into consideration property impovments or houses tho.
The foreclosure itself does not affect your values, what it is sold for might.
It really doesn't. If you had several foreclosures on your street, that might impact it. But one wouldn't.
Even if an appraiser sees the one lower sale from the auction, it wouldn't be the "comparable sale" they would use. Simply because, it isn't representative of what normal market conditions are. It's a distressed sale, and would be adjusted accordingly.
An appraised value of a property is simply an appraisers best estimate of what the property could go for under NORMAL market conditions. A willing seller, a willing buyer, and a competitive marketplace. These conditions do not apply to a foreclosure auction.
But again, this is if ONE property is lost to foreclosure. If there's 6 on a block, just the fact that the properties are likely damaged and vacant could drop your value.
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