Bank Owned properties and Foreclosures (foreclosed properties) are Effecting North Conway NH area real estate values

Keep track of my foreclosure listings at BillBarbin.com, my personal website. Over the past 6 months there has been a sharp increase in the number of sales of foreclosed homes in the general North Conway NH and White Mountain region. We have also seen an increase in the number of new foreclosure listings for real estate for sale. However, the trend is emerging that shows that these are the homes and properties that are staying on the market for the shortest period of time. What is this trend telling us?
It is common knowledge that banks and other lenders do not want to be in the business of owning and managing properties. We also know that many of these institutions are in some form of distress due to the banking crisis and stock market problems with mortgage backed securities. What I see from this information and the actual pricing practices of the banks that list their foreclosed properties with me as bank owned foreclosure listings, is that the lenders know that good deals are not selling right now. The only properties that are really selling are the "great deals". There are buyers out in the market right now. However, these are the buyers that are looking for obvious and dramatic values. Therefore, banks and lenders that have foreclosed properties are listing these foreclosure listings for sale at "great deal" prices.
The method they use is simple: They ask someone like myself, the listing broker, for an opinion of value. Then they order an appraisal through a certified appraiser. Then they undercut those prices by about 15% and list the property for sale, usually in "as is" condition. This results, quite often, in market times under 30 days and often multiple offers, many of which are cash offers.
How does this effect the rest of us? Well, when the market is hot and an appraiser looks at a property for a bank that is offering financing to a buyer, the appraiser doesn't use bank owned or foreclosure listings or even short sales as comparable properties for the report. They look at those sales as anomalous. But when the bank owned sales get to be greater than 25% or so of the sales for a given period in a market area, the appraiser has no choice but to use those for comparison pricing. The result is that every other value is compared against the competitive pricing strategy of the bank owned properties. This means that the report may not support the buying price of a privately owned property sale. Once the banks won't lend to a certain sale price, that property's value is immediately diminished. As this trend continues, every listed property faces the same problem with appraisals. At the same time, when you have a market with an over-supply of available homes and properties for sale, the buyers themselves are comparing one house to the next. These are the people looking for obvious value to make them feel comfortable with their purchase decisions. It ends up resulting in a 2 pronged effect on the value of all the other homes on the market.
Keep track of my foreclosure listings in the North Conway NH and White Mountain Region at BillBarbin.com, my personal website.