I think you guys might have to split the difference on this one. The original question was whether marketing a property as a foreclosure results in additional discounting. We’ll have to track this sale to see at what price it does eventually sell. I’m betting it will be below the current listing price.
I agree that the 10/2004 sale was $44,000 higher than anything recorded in the MLS for that project. The next 2 highest sales were at $880,000 for a 3974 SqFt unit in 11/2004; and more recently, $879,00 for a smaller 3070 SqFt unit in 05/2006. Using the 11/2004 sale as a benchmark, this property’s 10/2004 sale was way high to begin with. Maybe as much as $60,000. You can’t blame the market for that portion of any losses.
Using the 05/2006 sale, the current listing price may be a little low for a market sale. Or not – there are yet a couple of other actives in this project right now that if they sold within their ranges would indicate to a lower value for this property.
To answer SDRealtor’s comment, a responsible appraiser might have mentioned the $924,000 sale if they were doing an appraisal during that time period, but it stood out so far from the trend that it would have otherwise been discarded as not being representative of the trends at that time. No one sale makes or breaks.
If the lender is compelled to sell they could possibly be forced to accept whatever comes along. Again, if this happens it will represent an isolated incident in this project (so far) and would be rejected as a sale on that basis. It’s when there start to be enough of them to affect the other sales that these forced sales become relevant market indicators.
That’s the thing about using volumes of data – there are always exceptions to the trends and those exceptions only add noise to the analysis. It’s easier to analyze the trends when you toss the outliers.
