3 ms·

> Foreclosed homes naturally have > a lower value than non-foreclosed > homes Why?

obstinate 10y ago
I don't think the statement you're quoting is correct, however, they do tend to have a lower value. Here are some reasons: - Buying a foreclosed home is much more arduous due to bank processes, decreasing demand. - Foreclosed homes tend to be in worse shape. The owners may not have had the means or desire to maintain after realizing they would eventually lose the home.
- slg 10y ago
  You forgot the incentives for the seller. A home sale is likely the biggest transaction that most people are ever involved in. A traditional seller is more likely to hold off for the right buyer or price. For a bank, it is just one of many transactions. They are less likely to hold out for a specific price and will be happy to sell for 90 cents on the dollar to simply move on to the next transaction. >I don't think the statement you're quoting is correct, however, they do tend to have a lower value. I am curious why you say that quoted section was incorrect when you seem to agree that the value of foreclosed homes is lower.
  - obstinate 10y ago
    I thought "naturally have a lower value" implied that there is something about foreclosure itself that reduces the value of a home. I don't think this is true. Rather, I think that foreclosure is covariant with things that reduce the value of homes. So I wanted to clarify that point. That's what I meant by disagreeing with the quoted statement.
    - slg 10y ago
      Ok, I guess that is just a question of semantics. I likely could have phrased it better but the underlying point still stands that an increase in foreclosed homes will lower the overall home value in an area for the reasons we both listed.
deleted 10y ago
[deleted]
mikeyanderson 10y ago
It also doesn't fit the real estate agents incentive structure so they don't show the foreclosed homes and thus less competition for purchase and thus lower price.

I don't think the statement you're quoting is correct, however, they do tend to have a lower value. Here are some reasons: - Buying a foreclosed home is much more arduous due to bank processes, decreasing demand. - Foreclosed homes tend to be in worse shape. The owners may not have had the means or desire to maintain after realizing they would eventually lose the home.

slg 10y ago
You forgot the incentives for the seller. A home sale is likely the biggest transaction that most people are ever involved in. A traditional seller is more likely to hold off for the right buyer or price. For a bank, it is just one of many transactions. They are less likely to hold out for a specific price and will be happy to sell for 90 cents on the dollar to simply move on to the next transaction. >I don't think the statement you're quoting is correct, however, they do tend to have a lower value. I am curious why you say that quoted section was incorrect when you seem to agree that the value of foreclosed homes is lower.
- obstinate 10y ago
  I thought "naturally have a lower value" implied that there is something about foreclosure itself that reduces the value of a home. I don't think this is true. Rather, I think that foreclosure is covariant with things that reduce the value of homes. So I wanted to clarify that point. That's what I meant by disagreeing with the quoted statement.
  - slg 10y ago
    Ok, I guess that is just a question of semantics. I likely could have phrased it better but the underlying point still stands that an increase in foreclosed homes will lower the overall home value in an area for the reasons we both listed.

deleted 10y ago

[deleted]

mikeyanderson 10y ago

It also doesn't fit the real estate agents incentive structure so they don't show the foreclosed homes and thus less competition for purchase and thus lower price.