Cost comparison of newer homes-much higher value given-WHY?

Hello Joseph,

Good Question.  Of course the short answer is that age old determinant of value: location, location, location.  But in this market, there is more than just locational nuance to the answer.  For instance, it depends on whether the home is an REO (Bank term for Foreclosure), a Short Sale, or a "Flip".  If an REO, the Bank knows what it will likely fetch, so this usually most accurately reflects market value.  If a Short Sale, the agent is still attempting to get the highest price in order to make negotiating with the bank to accept a short payoff more enticing.  If a "Flip", the person who purchased the property most likely has gone in and painted and re-carpeted the home making it more enticing to a homeowner or investor who wants a turn key property.  Usually, this will fetch anywhere from $5 to $10 per square foot more for the home.  The REO or Short sale will most often need to be repainted and or re-carpeted; a task which many buyers do not want to take on, or if they do take on, they net down their offer to cover the cost of repairs. As well, because of the stress of losing their home, many homeowners or tenants about to be displaced will trash a home, ruining carpets, knocking holes in walls, and sometimes stealing appliances or even cabinets.  This activity is of course criminal, and some banks are going after the perp for their actions, thereby adding insult to the injury already done.

Hope this helps.

Best of luck and thanks for reading.