Short Sales versus Foreclosures – The Prices

All distressed properties put downward pressure on prices. However, the impact of a short sale is nowhere as drastic as the impact of a foreclosure for two major reasons:

  1. A foreclosure, in most cases, leaves a vacant house in the neighborhood. Vacant, unmaintained homes have a negative impact on the value of other houses in the area.
  2. When a distressed property sells, it can then be used as a comparable sale in the appraisals of all other sales in the market including the appraisals of non-distressed properties. Since foreclosures sell for approximately 10% less than short sales, they do more damage on the appraisals of other homes.

A short sale impacts the values of other homes to a lesser degree than a foreclosure.

Courtesy of the KCM Blog

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