Realtor Doug Reynolds interviewed me a short while ago about the impact of distressed sales in a neighborhood. How do short sales and foreclosures impact the real estate market in the Sacramento area? Here are some thoughts in a one-take video interview. For specific statistics, check out “Dear Doctor, how healthy is the real estate market in Sacramento?” and “What happens to foreclosure when prices go up?” I found the data in both of these posts to be very interesting. Enjoy.
Any other insight or thoughts about the affect of distressed sales?
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Interesting take on why a buyer might be willing to pay more for a property that is not a distressed sale. I hadn’t considered that the buyers may view a distressed sale as requiring more work to close and having more risk than a traditional sale.
I’ve certainly observed the trend you mention. I’ve found that time-on-market can also be a good indicator of just what type of sale this is. For example, if non-distressed properties are selling in 150 to 300 days, and distressed properties are selling in 60 to 100 days, then the exposure time becomes a much more important part of the value definition and resulting value.
I have to wonder if the pervasive market conditions you describe are not part of the reason that the Appraisal Foundation chose to reinstate the “exposure time” rule…
David Nittler
Nittler Appraisal and Consulting
Harlingen, Texas
Well said, David. I wonder about that too. It could very well be. Distressed sales really are often priced aggressively. There is a motive for a quick close. Banks need to get them off the books and they certainly don’t want to deal with vandalism and maintenance. Well, most of the time properties seem to move fairly quickly once they actually having an agent assigned to the property. Before an agent is actually handling the sale though, some banks seem to really take their time to actual possess the property. Thanks for stopping by, David.