Home Appraisal Maryland Observation
PreAppraise has extensive experience in the home appraisal Maryland market. In the current home selling climate within Maryland there is almost always a shortage of properties that are for sale. Meaning for every 20 houses that sell there are 10 active listings. You would think it would be a seller’s market right? Wrong! What I have noticed in the markets which have a median sale price range of $150,000 to $250,000 is that there are quite a large number of renovated properties in the active listing inventory. Most of these properties were acquired through short sale, foreclosure or auction. Basically through some distressed situation.
The Effect of Flipping on Home Appraisal Maryland
How is this having an effect on competing properties within those markets? It is fairly simple; let’s say an investor buys a row home through a foreclosure for $100,000. They normally pay between 50% and 70% below market value for those properties. That property is then gutted and renovated at an average cost of $50,000. The investor then lists and sells that property very quickly for $190,000 and is on to the next flip. These properties sell so quickly because most 1st time home buyers do not want to have to pick up a paint brush. The collateral damage that is starting to rear its ugly head from the mortgage mess of 2008 is becoming noticeable (again). In some markets you have more active listings that are renovated than non-renovated properties.
The Effect on Long Time Homeowners for Home Appraisal Maryland
How does the flipping effect home sellers within those markets who have been living there for a long time? The home owner who has been in the same row house for 30 years should have a gain in fair market value equal or near to the sale price of the house which was flipped and sold for $190,000. The problem is most home owners who have been in the same neighborhood for 30 years have made improvements to they’re home over that time period but most have not occurred recently. Those properties now have an inferior condition when compared to the renovated property. From an appraisal stand point it is unfortunate for those original owners because they will have to renovate they’re homes in order to obtain a top of the market sale price. What should have been normal appreciation in value has now been shattered by the irresponsible lending practices that happened between 2005 and 2008.
Home Appraisal Maryland Conclusion
Here we are in 2014 and the market is being flooded with both small and large investors who are gobbling up the distressed properties and capitalizing on them. Maryland still has a large number of foreclosures which have not been taken back by the banks. Renovated homes do represent the top of the market usually and they are not necessarily being sold for top dollar. Most are being sold for whatever the profit margin is that an investor wants to make. This too is a cycle home owners will have to ride out. This also makes it that much more important to get your home preappraised before you list it as markets are becoming more and more difficult to interpret. This sure is not fair to responsible home owners but it is absolutely a big factor in the marketplace and home appraisal maryland.