How do foreclosures affect my home?

Turn on the media for any amount of time and you will undoubtedly hear that this year the real estate market will suffer a huge wave of foreclosure properties flooding the market. If last year's trend tells us anything, more foreclosures are not going to bode well for our economy making a comeback.

But what does this mean for you if you need to sell your home this year?

Foreclosures can affect the selling of your home in two major ways. The first is through sheer numbers, creating an even larger number of properties in an already saturated market. The second way is they can sometimes drastically decrease the values of homes in your area, especially if there are foreclosure properties in your own neighborhood.

For the last year and for a long time to come in the future, real estate nation wide has been a "buyers market," meaning there are more properties for sale than there are people who want to buy them. This creates very choosy buyers who spend a long time looking at multiple properties, comparing them and looking for the best home their money can buy. A wave of additional houses adding to those already for sale is like adding fuel to an already very hot fire. Homes may sit, waiting for a buyer, for even longer periods of time while the potential buyers shop around and spend time chasing after these supposed foreclosure "deals."

The fact that foreclosure properties are generally perceived as deals leads to the second problem for home sellers. The banks that own these foreclosed homes do not want to keep them in their inventory, and price the houses to sell quickly and usually well under market value. This means that other homes for sale in the area must now compete with lower than average priced homes. Many home sellers are forced to lower the prices of their own homes in order to attract more buyer interest, which then leads to a domino effect of other homes in the area lowering their prices as well. It may not be long before entire neighborhoods, zip codes or even cities in some cases have lower home values than only a year before, due in large part to foreclosed properties.

If you live in an area with a high number of foreclosures, you may want to consider waiting another year or two before selling your home to let this current wave pass. It will not stay a buyers market forever and home prices will not take a downward slide for too long before bouncing back. Those who are able to wait it out will find themselves selling in a much better market for a much better price only a few years from now.

visit REstore Property Group to find out more about selling your home