If a home across the street from you has gone through foreclosure, it's likely that the foreclosure affects home values, not only on your street but throughout the neighborhood.
The magnitude or ripple effect of the distressed sale depends on where you live and the trend for your area. Take Elk Grove, for example. This is a suburb of Sacramento that once enjoyed the reputation of being the fastest growing city in the United States. But today, there are a lot of homes in default in Elk Grove.
A client asked me to do a comparative market analysis of her home. There have been no sales in that subdivision over the past six months except for a foreclosure, which makes that sale the only comparable sale. Now, appraisers can pull comps outside of that subdivision and adjust for value, but the likelihood is that foreclosure is going to affect this client's home price . . . read more about how Foreclosures Affect Value.
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At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.