The Language of Real Estate – Learning Real Estate one word (or phrase) at a time…
Abnormal Sale:
An “abnormal sale” in real estate typically refers to a property transaction that occurs under atypical or unusual circumstances, which may affect the sale price or the terms of the deal. Abnormal sales can result from various factors, and they may not accurately represent the market value of a property.
Some common situations that can lead to abnormal sales in real estate include:
Distressed Sales: These are sales that occur under duress, such as foreclosure, short sales, or bankruptcy. In such cases, the seller may be motivated to sell quickly, often resulting in a sale price lower than the property’s market value.
Family Transfers: When a property is transferred between family members, the sale price may not reflect the actual market value because it can be based on family relationships rather than market conditions.
Off-Market Sales: Some properties are sold without being listed on the open market, which can make it challenging to determine their true market value. These sales may happen through private negotiations, between friends, or within a closed network of buyers and sellers.
Estate Sales: When a property is sold as part of an estate settlement, the sale price may not reflect market conditions because the goal is often to distribute assets among beneficiaries rather than maximize sale value.
Auction Sales: Properties sold at auction can sometimes fetch prices that are either higher or lower than their market value, depending on the competition and bidding process.
Non-Arm’s Length Transactions: Sales between individuals or entities with close personal or financial relationships, like business partners, can sometimes involve prices that do not reflect the broader real estate market.
It’s important to note that abnormal sales can distort real estate market data and may not be suitable as reliable comparables for determining property values.
When appraising a property or making real estate decisions, it’s usually more accurate to rely on typical market transactions that represent fair market value.
