This happened to a friend of mine. Her one neighbor sold low to the daughter for a quick sale, another sold at sheriff sale because the owner went to jail, another sold to a mental health group for a cheap fast sale, and so on. It figures that the comps are going the wrong way. Good luck.

Thanks Tuscan. I think we are going to hold onto the house and rent it out. We have friends who are trying to move back to the area and also want to build but are having trouble finding affordable temporary housing. It may be our best option as the house won't be left empty, the rent we'll be able to get will cover most of the mortgage so we won't have to carry 2 full payments and hopefully the market will start to improve. I just hope my neighbors stop dropping like flies.

Why are your neighbors dropping like flies? Is there anything economically wrong with the area? No jobs?
Any indications that it'll get better soon?

The town I'm in is very rural and house prices are very reasonable in contrast to surrounding towns and most of the State for that matter. Most of the homesales have been to "transplants" looking for affordable housing, and easy access to the highway.

There is no industry in the town but is situated 1/2 east and 1/2 west of 2 cities.

Not much is selling right now, but those that do are selling with approx. 30 DOM. They are also selling for much more than what is happening on my street for very similar properties.

I do know of the 2 properties on my street that I mentioned, the foreclosed house is a victim of a divorce (7 months after family moved in). As far as the short sale property, they are only the 2nd family to own the home and I have no idea what their situation is.

There are a few more that new homes on the street that have been built within the past few years. As for the rest of the neighborhood, most are families that have been here forever.

As far as things changing, I can only hope so.

I understand that you've got to do what you have to do, but renting your home will have a similar effect on the people who remain in your neighborhood. We don't have any foreclosures or short sales in our neighborhood, but our elderly neighbors had to get out of their multi-level house fast for mobility reasons. They sold quickly to a realtor who has rented the house to college students. I'm not so concerned about the decrease in property value, because we plan to stay here, but having keg parties across the street is something I wouldn't wish on anyone. Even if you don't rent to college kids, a rental in a neighborhood of owner-occupied homes, can have a negative effect.

Typically distress sales don't count against the rest of the neighborhood. You just have to make sure the appraiser for the bank is aware of it when it comes time for an appraisal.

Of course, they have to be documented. I once had a guy who insisted every single sale in his neighborhood was a foreclosure. (4 of them in 6 months)because he thought his house was worth $50,000 more than it was. I refused the listing, he has expired 3x already. Sooner or later, he'll get it.

Clunk.
The sound of the other shoe falling.
Good luck.
Jo

This has certainly been an enlightening experience.

Although distress sales shouldn't be valid comps for a property it is very hard to compete with them when they are 4 and 6 doors away. Regardless of what banks or appraisers think, why would a potentenial buyer prefer to spend so more on a very similar property. I see it as a bargaining chip, and not in my favor.

As far as renting out our property, I do understand that having rental property may be undesirable. There are other renters in the area with little impact on the surrounding neighborhoods. We don't intend on advertising and renting to just anyone. It would certainly be only someone that we know.

The benefit that we see is that we can ride out the market, stay in our home until constuction of our new home is complete, and we will not have a vacant property.

Typically distress sales don't count against the rest of the neighborhood. You just have to make sure the appraiser for the bank is aware of it when it comes time for an appraisal.

Hmmm... they would sure matter to me if I were a buyer in that neighborhood.

I think those distress sale house are typically in poorer shape and will require some work. At least they are in my neighborhood.

There are plenty of reasons people would pass on a short sale/distress sale property. I've had buyers who would look a an REO, then decide that dollar-for-dollar, they were better off buying another house up the street that didn't need so much work. "Heck honey, for only 15-20k more, we don't have to live through replacing carpeting, painting, and appliances. Plus we won't have to do any yard cleanup. Ick. Look at all of those weeds and dead plants...."

Sometimes the REO/short-sale properties are just low enough to make your already-spruced house look more appealing.

"Typically distress sales don't count against the rest of the neighborhood. You just have to make sure the appraiser for the bank is aware of it when it comes time for an appraisal.
Hmmm... they would sure matter to me if I were a buyer in that neighborhood."

It would matter to me too, if I was in the buying position.

"I think those distress sale house are typically in poorer shape and will require some work."

I wish that were the case. My house is a 5 yr. old Cape with a farmers porch. As for the forclosed property it is a 2 yr. old Cape with a farmers porch (1 of which has been vacant) and the bank has been maintaining the exterior. As for the short sale property it is a smaller (by @ 400 sq. ft) 9yr. old Cape but it has a finished basement. This property is definitely more dated.

I think the advantage that I do have appearence wise, is that we've had professional landscaping, (including a stone wall trees and perennials). We also own a buildable lot directly next to the house which could be sold as a package or separately.

I still believe these other properties, regardless if potential buyers preferred ours, would be used as a huge disadvantage to us.

For now we are going to ride it out.

How does the foreclosure stack up to your home - if it's a fixer in need of lots of work then is it really comparable?

Regarding the short sale - is it a bank approved short sale? Has the bank already agreed to allow the property to be sold at that asking price? If yes - ouch - if not it's going to cause you some trouble because of course buyers are going to be tempted by it but eventually the word is going to get out there that shorts sales are in large part time wasters (IMHO!) and avoid them like the plague they are (again MHO!). Hopefully someone who likes your neighborhood, and has a savvy agent who knows to steer them away from the "not gonna happen steal of a deal short sale", will find your home. As long as it's priced very competitive to the non short sale/foreclosures you should be in a good position.

Wishing you lots and lots of luck. My heart goes out to all the sellers right now who are basically sitting and stewing while buyers chase these short sales being advertised at unrealistic and impossibly low prices.

Oooof, nothing sends me into a rant like short sales, sorry!

acoreana- the foreclosue house is the identical floorplan. Builder decided that he liked the changes we made and now uses our revisions. I do know a realtor who has been in the property and said that the appliances are gone and there is one hole in the kitchen wall. Other than that I've got nicer landscaping and the possibility of a second lot.

As for the short sale, yes it is bank approved. That house is a similar Cape, a little smaller but has a finished basement, and has lots of outdated wallpaper boarders.

Good news is that I found out today that the foreclosure has an accepted agreement. I hope it goes through ASAP

Hmmmm, I was hoping for you that it was in the type of condition our recent foreclosure purchases are in - needing lots of reno, etc.

Bank approved & comparable is not so good news. I was again hoping for you that it wasn't, dang it. I don't know if your place can surmount a $30-50k price difference due to some wallpaper, etc.

Having more time to read through this thread I've realized that you'll be able to rent it at this time and still move on to your next home. That is a blessing!

You can't base your house's worth just on those 2 comps. We've had houses sell in our neighborhood for $50,000 and some for $156.000. When the appraiser for the bank came around to appraise our property for a loan, they appraised it at the high end of the comps, not the low. Your house is not just worth what some other house was sold for. It does have other merits to base its' worth.

(the bank keeps dropping the price, to the point it makes me sick).

I can't honestly say I've been paying attention to the foreclosure market but there are foreclosures that have been in my standard mls search for months - no drop in price. And there is nothing interesting or particularly appealing about these properties. They are priced to compare with "normal" housing but no one has been living in them, they need repair etc. and the bank just lets the price sit. Which is one reason I havn't spent more time paying attention to the foreclosure market - no deals there as near as I can tell. I wonder what the difference is?

I guess I'm more concerned with buyers than the banks themselves. I'm definitely waiting until at least one of these properties to sell before I even consider putting mine on the market. All 3 (mine included) are extremely similar (same builder). I don't want to compete with their low ball price. The foreclosed property has an accepted offer for almost $100,00.00 less than the purchase price in August '06.

it that 100K or 10K less?

kartwheel- oops! That should have read 100K less.

I am glad you have the possible renter, and someone you know and trust, at that. I have a nurse I know doing a rent-to-own in my old house. With the house across the street in foreclosure and for sale at $69.9K (no typos), I worry that she will walk away from our agreement at $139K. The house across the street is a third smaller and the lot smaller, but with all the vacant properties, bank foreclosures, short sales and a rotten economy, I can imagine her deciding that she can get more house elsewhere if the fall in values in Michigan does not slow.

I hope it works out with the renters you have in mind. It sounds like the perfect solution for you. One thing to keep in mind is how much your home appreciated and how much value you added by improving it after you bought it. If you end up renting for three years or longer, you will need to be able to show what improvements you made to the house so that you can offset whatever increase in value the house had since you bought it. With the huge capital gains write-off we now get when selling a house, I would bet that people are not saving the receipts like we used to. If you never expected to rent out your home, your record keeping may not be up to par. If you don't live in a house two of the last five years before selling, though, you lose that capital gains write-off. Then you need the receipts to show your improvements so that you can increase the "basis" you have in the house.

Best wishes for a low-stress transition to your new home!

nancy - good luck with your rent-to-own tenant. I hope it works out for you. These foreclosure situations are terrible not only for those who are losing their homes, but also for people who would like to refinance or sell.

My father-in-law is our accountant so we will go over what our best options are, as far as selling goes. We have made some minor improvements, but nothing major as we had this house built only 5 yr's ago. I hope to sell while we're still eligible for the capital gains write-offs. If not we''l cross that bridge when we get there.

Nancy,

I remember your saga. Doesn't your contract with the nurse prevent her from walking away?