As the foreclosures continue to mount up in the market, their selling prices are negatively affecting value across the whole market. It is predicted that 40% of all sales this year will be some type of “compromised” sale and currently 23% of all the houses on the market are compromised, meaning either bank owned, short sale (current loan is greater than selling price) or sale by a large lender like Freddie Mac, FHA, Fannie Mae or the VA from their foreclosed inventory. The sale of the “compromised “ properties is driving prices down because they are selling in a range of 8-20% below what the average sellers want for their homes. Simply put, the foreclosures are pushing prices down for everyone.

It is simple supply and demand. The companies that are selling the “compromised properties” are getting them ready for the market with new carpet and painting. They are making them very competitive.

Currently, in each price range, what is selling is in the bottom 8-15%. I personally think that 70% of all listings get eliminated on the internet by price alone. It is a bottom up price wise search. If you can buy what you want in the bottom 10% price wise of the market, then you never even look at the other homes that are listed.

There was a time when the appraisers did not consider foreclosure properties as “arms length” transaction. This is what we were taught as a standard practice, but when the foreclosure properties become the market, they must be considered. Appraisers are having a difficult time justifying sales values outside of and above the foreclosure market sales. This can result in an appraisal lower than a market sale, which can put the deal in a tail spin.

The most contentious part of this is that review appraisers or loan officers/underwriters also adjust values. That is where we really have a problem in the market, when the loan company wants to set values. It is a very interesting real estate world right now! Actually, we are selling more this year than last. We can help you through this mess, call us. “We’re always open…online” at