Foreclosure, foreclosure, foreclosure, we’re all sick of hearing this word.  It’s pasted all over the news everyday, and we can’t quite seem to get away from it.  I hate to harp on it any more than necessary, but I ran across an interesting article regarding foreclosures in regard to how it affects property values.  We all know how devastating a foreclosure looks on your credit, but what about how the foreclosure affects the home itself.  After the devastated homeowner is evicted, he or she moves on with their life, where ever that may be, but the house remains…and more importantly, so do the neighbors and their properties. 

So how does a change in home ownership effect property values?  To put it in perspective, when a homeowner dies, the property value usually dips 5-7%.  If a homeowner declares bankruptcy, the house price drops approximately 3%.  These figures seem nominal and practically harmless, right?  Now lets bring back that nasty “foreclosure” word; the value of a foreclosed home drops an average of 27%.  If you’re looking to buy a home,  then a foreclosure seems to be the way to go, right?  You would buy a pair of jeans if they were 27% off, why not a home?

So why does the value of a foreclosed home drop so drastically?  Research suggests that most homes in foreclosure fall into a state of disrepair, long before they are considered foreclosed.  If a homeowner can’t afford to make his monthly payments, is he going to have money to keep up the landscaping and other exterior maintenance?  What about pest control, mechanical maintenance, or any of the other multitude of expenses that come with owning a home?  Bottom line- if you aren’t paying your mortgage you probably aren’t paying for upkeep either.

What if you live next door to a foreclosed home- how is your property value affected?  Research shows that a home within 250 feet of a foreclosed home loses 1% of its value.

For a complete list of Nashville, Brentwood, or Franklin TN foreclosures email me.