Peggy Wright
Sophomore Member
- Joined
- Mar 16, 2003
I recently had an interesting conversation with some collegues on the effects of forclosure on a house. A couple of appraisers said that just because a house went into forclosure, that it in will not neccessarily affect price. Yet, if you do a sales history search and a current sales grid while following a forclosure, they rarely sell for what other homes sell for, even if in similar condition to the comparables.
So, the homes that are in forclosure command a lower price (I believe this is because the public tends to shy away from houses with a bank owned sign, and the bank needs to deal). Now an investor buys the property, needs paint and carpet, perhaps, gets it spiffy, puts a non - bank owned sign in the yard and it sells for market rate. Yet many mortgage companies are coming up with seasoning issues to defray the "flipping schemes". How do we best analyze and document how a forclosure can legitimately sell for a lower price 6 months or less before it sells for market price with new paint and carpet- with no scheming involved?
So, the homes that are in forclosure command a lower price (I believe this is because the public tends to shy away from houses with a bank owned sign, and the bank needs to deal). Now an investor buys the property, needs paint and carpet, perhaps, gets it spiffy, puts a non - bank owned sign in the yard and it sells for market rate. Yet many mortgage companies are coming up with seasoning issues to defray the "flipping schemes". How do we best analyze and document how a forclosure can legitimately sell for a lower price 6 months or less before it sells for market price with new paint and carpet- with no scheming involved?