If you think you don’t have to worry about selling your Morton Grove home and moving on when the need arises, think again.
Every day means your house is losing value.
That’s right. Every single day.
Face value
Overall, economic and market forces continue to plague the real estate marketplace, and will for some time to come.
One of those market forces has to do foreclosures and short sales.
Short end of the stick
Over the past year, 37% of all single-family detached homes sold in Morton Grove were ‘distressed’ homes ... either foreclosures or short sales.
Digest this for a moment.
1 out of 3 homes sold in Morton Grove during the last 12 months was a ‘distressed’ home.
A ‘distressed’ home is one in which the homeowners experienced some kind of financial crisis. Either they lost their home to the bank. Or they sought permission from the bank to sell their home at a loss.
Data provided by the Midwest Real Estate LLC (MRED) multiple listing service and includes properties listed and sold by various participants in the MLS. Data supplied does not reflect all market activity in the area.
On the market
When 37% of Morton Grove homes are either foreclosure/bank-owned sales or short sales, it’s apparent that banks can influence the market value of your home.
What does this mean to you as a homeowner?
It means that often you don’t determine the purchase price. And neither do buyers. Banks do.
Every day, banks set and reset the market value of your home by determining how much they’re willing to sell their inventory of foreclosed homes for. Or what sale price they’re willing to approve short sale homes for.
A price above rubies
Typically, short sales go at a 10% discount of recent home sales. They have to. Otherwise, why would homebuyers want to wait 3 months, 6 months, or longer for bank approval?
Foreclosed homes typically sell even lower … by as much as 15 to 20% below recent sale prices of non-distressed homes. Or even more, depending on condition.
I know what you’re thinking. You’re thinking that foreclosed and short sale homes can’t possibly affect the value of your home. After all, your home is in perfect condition. It’s been lovingly maintained. It’s in move-in condition.
Unfortunately, appraisers don’t always see it that way.
Laughing Crying all the way to the bank
For argument’s sake, let’s say you put your house on the market tomorrow. Let’s say homebuyers see what you see … a perfect house in perfect condition.
Let’s further say that these buyers meet your asking price. Now they have to get a loan. And their bank has to make sure the investment is a good risk.
The bank hires an appraiser to make sure the buyers aren’t paying too much for your house. The appraiser pulls records of recent sales in your neighborhood. Unfortunately, 2 are foreclosures or short sales.
The appraiser should make an adjustment to account for the distressed status of those homes, but doesn't always. When she does, the amount probably won’t fully recognize the discount. That's because the appraiser can’t really know what the true condition of the house was, so she’ll err on the conservative side.
The appraiser must also err on the conservative side because she knows market values could very well get worse.
And bam! Your house isn’t worth as much as you or the buyer thought it was.
Are you stunned? Incensed? Confused? You should be.
But know this.
It happens. In this market climate, it happens all the time. Yes, homeowners can fight the appraiser’s opinion. And sometimes they can win, but not as often as they’d like.
If this happens to you … and you really want to move … you’ll be forced to lower the price so the buyers can qualify for their loan and you can close the deal.
Take it to the bank
So if you think foreclosures and short sales have nothing to do with you or your house, think again. They have everything to do with your ability to sell your house at a price that will allow you to move on. And you can take that to the bank!
Need to sell your home ... but can’t because it’s lost too much value?
Call Judy at 847.749.3811 to find out how you can sell your house as a Short Sale.
I list and sell Short Sales all over Chicagoland!
For more about Short Sales, visit ChicagoShortSales.com.
