Do you know how foreclosures affect neighborhoods?

Yes, there's the obvious. The grass gets tall, the home not only is abandoned, but looks abandoned. There's old newspapers in the yard.  And there's always the threat of people breaking in for nefarious activities or vanadalism that could spread to your home.

But monetarily, for every foreclosed home that shows up in your neighborhood, your property value will decline by 1%, initially.  But worst than that, when that foreclosure sells at a drastically reduced price, your values will tumble even further.

We have been faced with homes dropping in value by over 25%.  Example:  appraised for $268K in May only appraised for $210K in October; home appraised for $615K in May, sold for $400K the following year. It's not good and we're not out of the woods yet.


You might ask - were these bad appraisals?  The answer is, No! At that time, they were good appraisals. (An appraiser makes a judgment based on the facts at that point in time - it's a snapshot.  Usually appraisals are good for 90 days and they are one person's educated analysis of the value. Remember we all have opinions and another appraiser may have a totally different opinion.) However, when the market deteriorated after that point in time, the values changed.  And whereas years ago, foreclosures did not define the market, today they do.  Years ago, appraisers did not use foreclosed homes in their analysis.  Today they have to.

Our company President, Dan Forsman, declared that home values have bottomed.  Let's hope he is right.  Because, for those that had to sell during this turbulent market, it wasn't easy or pretty.  The good news is they sold, the bad news is they lost value.

Check out the complete report - http://bit.ly/HomeValuesHitBottom