One of Cliff Gager’s recent students initiated the following discussion:
“I was wondering what a foreclosure sale does to the price of a neighborhood and how long it takes before the values listed on the website would reflect a wholesale deal on property. For example, if a property was originally thought to retail at $400,000 and we pick it up for $200,000 or so, will that make all the prices adjust downward into the $200,000 price range on RealQuest as soon as the sale is recorded or is there something that keeps the other prices up closer to $400,000?”
Cliff responded below:
You have what they call a qualified sale and a non-qualified sale. A sale from one owner to another with normal conditions is a qualified sale. When you buy a house drastically under market due to the condition of title, e.g., foreclosure, damaged property, etc., the appraiser can adjust for that. Recently, we are seeing houses sell to end-users at a fair marketable price and those will support your value at the higher range; although, the unqualified sales will average the overall value down for the houses in the area. You need 3-4 full sales to compare to support your sales price when you sell.
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