The Decline of Real Estate Comparables
The inside of the decline of the real estate housing market is a place you must visit to get a grasp on what is happening in the market place. Some are wondering why and how properties continue to fall at this rate. There are places in the Chicagoland market where property values are dropping more than $10,000/month. Chicago is not alone. This is happening all over the country. And most people don’t understand why.
Real Estate Comparables Effect on Value
It is important for the reader to understand how value is determined in the first place. House market value is determined by the recent sale of real estate comparables, properties that are similar to yours and have sold. The properties that have sold recently determine the value of all the other properties in a given neighbor hood. Therefore, real estate comparables have an enormous impact on value in the House market. It is everything.
Sale Prices Are Down, so Are Real Estate Comparables
The properties that are on the market and selling today are tomorrows real estate comparables and will be used to justify value of your property. The properties that are selling today are facing increased competition because there are an abundance of homes for sale. Many of these homes are in a distressed situations and selling at a discount.
The over supply of properties on the market and discounted sales are effecting the entire real estate marketplace because buyers are not in a rush to purchase and definitely not trying to over pay. This is leaving a minimal amount of sales and properties available to uses as real estate comparables. In addition, these properties are likely being sold at a discount to the previous sale and thus bringing down the value of real estate comparables and values in a give neighborhood.
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[...] you are in the real estate industry, the more you realize the importance of property valuation and real estate comps. As many real estate agents, loan officers, buyers, and sellers can attest, a closing can fall [...]