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Appraisals and Tax Foreclosure Properties

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By : John Cutts    99 or more times read
A couple of years ago, before the foreclosure crisis started, the foreclosure factor was not included in real estate appraisals even if there were also tax foreclosure properties then. The number of lender foreclosure properties then plus the number of tax foreclosure properties were not so high to have an effect on home prices.

Nowadays foreclosures have to be considered in appraisals. In 2008, foreclosures across the country increased by more than 80 percent to 2.33 million units, pulling down home prices to bottom levels and requiring appraisers to factor in foreclosures when making appraisals. Whereas before tax foreclosure properties did not figure in appraisals, nowadays they figure because of the soaring number of lender foreclosures.

According to Arizona appraiser Jeff Harper, the Yuma housing market is being pulled down by foreclosed properties and short sales.

He said previously foreclosure figures were negligible so their values were not used in appraisals. Nowadays, anyone planning to sell a home will have to compete with the low prices of foreclosed properties. Perhaps tax foreclosure properties are still an anomaly these times compared to lender foreclosures, but they add to the foreclosure figures.

Nevertheless, Harper said there are still well-maintained homes that get good prices, especially turn-key houses that appeal to certain buyers. But generally, he said, home prices are declining, with a home priced $250,000 about six months ago being currently priced at $225,000. Appraisals for tax foreclosure properties have also been declining.

Harvey Campbell, a broker with Broken Arrow Realty, cited cases in which a developer gets a sale, builds the house with the contract price in mind, but then the appraisal results in about $20,000 through $50,000 lower than the contract price. Either the developer gives up those thousand dollars or keeps the house and gives back the earnest money to the buyer.

Meanwhile, Bill Craft, head of Wells Fargo Home Mortgage in Yuma, said lower appraisals have not been a problem at Wells Fargo because sellers have become realistic about their prices. They know how lender foreclosures have affected the market and they know there also tax foreclosure properties out there.

Craig has also become optimistic about the housing market. He said foreclosed homes on the listing service are now much fewer than in November 2008 when the figure even reached 1,540 units.

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