sd teacher the information source that I use to analyze comps and give people sales price recommendations are based on the MLS information. As Bugs said the only sales logged on the MLS are sales where the MLS was used the advertise the property for sale. Let’s get things straight, a trustee sale, which is what you are referring to, is when a home is sold at auction. The home becomes an REO if nobody purchases it. Technically this is a sale because title is transferred to the lender. However these “sales” are not part of the MLS “sold” properties. So as a Realtor I do not use them as comps to recommend a price. Now once the properties are owned by the lender, if the lender chooses to hire a realtor or broker and advertise the home on the MLS then when the home is sold the sale will be on the MLS for me to use as a comp.
So the long winded answer to your question about how foreclosures will affect the median price per square foot is that it depends. If the agency collecting the data uses only MLS information, it will be one value. If the agency uses a souce that has ALL the sales including FSBOs, and all other sales that are not recorded on the MLS then the value will be different.
Common sense will dictate that the more trustee sales, the more lender owned properties will hit the MLS. The more lender owned properties there are, the more likely prices will depreciate, (as long as buyers don’t pay high prices); hope that all helps.
