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Debt Relief – Insolvency – Bankruptcy Information » Foreclosure Help » Does a foreclosure on a house lower the value of other houses?

Does a foreclosure on a house lower the value of other houses?

If the house next door went into foreclosure and then sold for a much lower price than it was originally valued at, does the value of my house go down as well? If so, is this a problem if I am not planning on selling in the near future?


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7 Responses to "Does a foreclosure on a house lower the value of other houses?"

  1. Pearland Real Estate Guy says:
    If the house sells for less than its value, it will hurt your value.
  2. financialpeas says:
    The value of your house is based on the value of other sales of similar houses in the area. So, a foreclosure drags them all down. If you are not selling or refinancing, it’s not an issue for you.
  3. luchadore says:
    no not usually…appraisers ( people hired by banks and lenders to asses the value of the home so banks don’t loan out too much money for property) don’t normally look at forclosures when assessing the value of a not bank owned property. Will it make your life difficult as a seller, because every buyer on the planet will want you to sell your neighboring property at the same bargain basement price… YUP.
  4. robert w says:
    sorry yes.
    however now u can fight ur tax assessment cause houses$ are lower than tax authority says they are.
  5. stephen t says:
    Yes, there have been extensive studies about foreclosures lowering housing values. It should not have an effect on your house if you are not planning to sell. It may effect a refi of your house. Also, foreclosures/abandoned houses attract crime and can become a nuisance.
  6. cuttin_in_mcfly says:
    Yes! I recently attempted to refi a house I’ve owned for 10 years. The value has grossly diminished due to foreclosures and short sales in the area. Two of the houses the appraiser used were short sales. I now have less equity in the house than I did when I bought it.

    If you are NOT planning to sell or refi in the near future, however, it shouldn’t be a problem for you. The market should stabilize eventually.

  7. godged says:
    Most comparables for appraisal value are only used for the past 6 months to a year. So if you are not planning for refi or sell within the next year, you should be fine. But if there are more foreclosures for comparable properties in your area, those will also effect the appraised value.

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