The current value of homes is very dependent on their location.
Not the "location, location, location" phrase you hear from Realtors all the time.
But the location in reference to the amount of foreclosures, pre-foreclosures and bankruptcies in the area.
For example....as I have mentioned I do "drive-by shootings" on a daily basis. I also do "interior shoots". What these are is I am contacted to do either an exterior or interior inspection on a particular property for either a mortgage company or a bank, who ever holds the entire lien or part of a lien on a property. Often it is the secondary lien holder ....a home equity loan or 2nd, 3rd, etc mortgages...who are requesting the inspection.
If an exterior...I take pictures of the front, the house number for verification, the street view for note of surroundings, and sometimes the street sign for verification.
For an interior....I take the same as for an exterior, but also a picture of each room for verification of room count, note of any improvement or damage.
This all goes on a report that when printed out is anywhere from 5-15 pages depending on the requesting company.
It also has 3 currently listed properties and 3 solds within a certain time frame....at most within 180 days, least 30 days. There are specific items of comparison: age, style, size, lot size, garage, room count, specific on bedrooms and baths, list price and sold prices.
Most importantly is whether or not the property is compared with an owner resale or a foreclosure, and that the comparables are within a certain distance range, perferrably within 1 mile.
If an area has a high percentage of REO's(foreclosures) then it makes sense that some of the comps are also REO's. If there are very few, then there usually isn't an REO included in the comps.
Some orders will specifically state to use REO's. Some will specifically say not to use them. Others will request at least one REO list and one REO sold.
The amount of REO's in a specific area will greatly determine the value of a property. Not because the property has actually
lost value, but because the surrounding properties have lost value due to either foreclosures, forced sales, short sales, or deterioration to the properties. In the case of FL, we are seeing it happen ever since the hurricane season of 2005....Charlie, Katrina, Rita and Wilma all in one season....caused homeowner's insurance to skyrocket ...in many cases forcing people to sell or lose their homes because they can't afford the insurance. Mortgage companies require a homeowner to have insurance.
Las Vegas is being hit horrendously on homeowner values. We were contemplating moving there a year ago, and I have access to part of their multiple listing service. I have watched houses drop several hundred thousand dollars...both owner resales and foreclosures. But judging from the pictures of the interiors, many were grossly overpriced to begin with. That market will eventually stabilize. Florida and California have had similar issues, though I don't think, from industry articles that I have read, that it has been as extreme except for waterfront/resort/country club properties.
From everything I have read....again from various real estate sources, ie National Association of Realtors, my state and local associations.....no one is expecting to see much, if any, stabilization in the market before the last half of 2009 if then. There are still too many ARM's out there that are due to adjust in the next 2 years.
More info than anyone wanted huh?
