Short Sales at Artificial Prices Hurt the East Boston Market

Two recent property sales in East Boston exemplify how short sales can contribute to a neighborhood’s plummeting property values. Recently, two of East Boston’s largest and finest triple-deckers were put up for sale and sold for about $100,000 less than market value in less than a week, without giving potential buyers an opportunity to bid or pay true market value for these properties. In both cases, the real estate agents listed and sold the properties quickly to their own buyers and then proceeded to negotiate with their sellers’ banks in order to have sale prices accepted and the sellers relieved of mortgage debt.

61 Homer Street is a large three-family with four parking spaces. It was listed on May 14 for $400,000; an offer was accepted on May 15. It sold on September 21 for $315,000. The City of Boston’s assessed value was $412,600. It could have sold on the open market for about $425,000. Similarly, 127 Princeton Street, a large three-family, was listed on August 21 for $499,000. It had an accepted offer on August 24. It sold on September 14 for $258,000. The City of Boston’s assessed value was $346,400. It could have sold on the open market for about $350,000.

By accepting artificially low sales prices of $315,000 and $258,000, lenders on these properties allowed sellers to walk away from debts and allowed real estate agents to limit sales to their own buyers and earn larger commissions than they otherwise would have. Meanwhile, neighborhood values were hurt. If lenders had required these properties to stay on the market for at least one to two weeks at somewhere near their market or assessed values, these properties could have sold for more money, creating documented sales at higher prices. It would then be easier for other buyers to obtain fair appraisals of properties purchased from “regular sellers” and easier for homeowners who are looking to refinance, the opportunity to obtain decent and fair appraisals on their properties. The sale of two of the neighborhood’s largest and finest triple-deckers at artificially low prices will have a lasting negative impact on homeowners throughout East Boston. While two homeowners might have been relieved of their debts, the neighborhood is paying the price.

Please check back as we continue to update you on East Boston real estate happenings.  To see all our listings, or to search MLS properties, head to the Tony’s Realty Website.

Email Tony with your questions or comments.

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