Well...this sorta hurts the neighborhood

[seashoreCM]

If I'm reading correctly, selling for $350,000 instead of $425,000 isn't so bad. 18% low.
My neighbors decided to foreclose and their house sold for $68,000. I had just bought mine for $165,000. Their square footage was slightly higher than mine. Now that will effect your comps!
The real kicker was they had spent years saving money in a trust. They bought the house with the trust. When they were ready to move they sold it to themselves for a higher price, lived there for years without making a payment, then just before they got kicked out they bought a new house with the trust. They hit a bit of a goldmine because they started this just before the housing crash... they sold to themselves at the height of the market and got to buy triple the house for the same price! Every so many years when they can personally buy a house again they take their money, live free for a couple years and run with the profit. They helped ruin our local market, kill my home's value and I had to watch them make out like bandits.

Your neighbors probably did not make money other than through tax deductions.

Only a lender or a creditor holding a mortgage or other lien can foreclose. So your neighbors had to have sold the house to themselves using seller financing. When they the buyers did not make the payments then they the sellers/lenders foreclosed. Since the house, bought for six figures, sold for $68,000 they the sellers/lenders took the hit. Now, in most states they the lenders could go after themselves the borrowers to collect the difference called a deficiency but most likely they the lenders elected not to do so. Meanwhile their trust, where they deposited the would be mortgage payments, grew to the point the trust could provide the down payment for another house after a third party bought the house at the foreclosure sale and for the bargain price of $68,000 and they your neighbors had to move out.

How fast a house sells will suggest whether the selling price was unusually high or unusually low.

 

[mistysue]

Your neighbors probably did not make money other than through tax deductions.

Only a lender or a creditor holding a mortgage or other lien can foreclose. So your neighbors had to have sold the house to themselves using seller financing. When they the buyers did not make the payments then they the sellers/lenders foreclosed. Since the house, bought for six figures, sold for $68,000 they the sellers/lenders took the hit. Now, in most states they the lenders could go after themselves the borrowers to collect the difference called a deficiency but most likely they the lenders elected not to do so. Meanwhile their trust, where they deposited the would be mortgage payments, grew to the point the trust could provide the down payment for another house after a third party bought the house at the foreclosure sale and for the bargain price of $68,000 and they your neighbors had to move out.

How fast a house sells will suggest whether the selling price was unusually high or unusually low.

This all took years to happen.
They sold to themselves with bank financing, never made a payment, lived there free for about 2 years, bought a new house, moved, and it took another 8 months or so before the bank came and officially took over the house. They were putting notices on an abandoned front door. Then after a couple years empty and not even on the market, it got sold to HUD for $1 who sold it for $68,000 after a few years to somebody who flipped it. I lived there about 5 years without a neighbor. For about five years I was actually sitting between two forclosed and abandoned houses, with the banks dragging thier feet because nothing here was selling. Your version sounds nice, but no they foreclosed on a bank loan not on their loan to themselves.

 

[scrapquitler]

I live in a small neighborhood, 78 homes (though we literally back up to a large one) A home just sold for $75,000 less than a comp~and the only negative on it is that it is near the street light of a busy-ish intersection. That is a really big amount to have other homes start to rebound from. Dang it....I mean, 20-40 is an expected spread, but 75? Not a short sale or foreclosure either. The Realtor who handled it lives across the street from the sale too...in the neighborhood. I know~ their home, none of my business, and on the up side it did sell but it still stings.

Maybe it needed a bunch of work that wasn't obvious? Or maybe the seller just needed to sell it really fast.