Summary
A reader asked me to evaluate this property. It was built in 1965 has 4 bedrooms and 2 baths. 1,264 finished sq ft on the main floor and 1,000 sq ft finished in the basement. From the photos it appears to be very dated on the inside.
The seller bought this property for $133K on 3/17/1998. I believe where they are getting their comps are from 2311 Greenbrier which sold for $308K on 7/29/2008 and $310K on 9/6/2007. The problem is that all of those sales were pre-CRASH pricing.
Lets review what the sellers are looking to take away from the property. Lets assume they bought the property for 10% down at 7% on a 30 year. They would currently owe about $100K on their loan and would have paid interest payments of $86K. Their total investment in the property has been $86K (interest payments) + $13K (down payment) + $19K (principal payments) which equals $118K.
Assuming they sell at full list price of $339K gross proceeds after selling the property (6% realtor fees plus 1 % closing costs) is $315.27K. After paying off the bank loan the owner has $215.27K. On an investment of $118K that is a return of 182%!
The city has the house appraised at $265.3K ($72.5K for the land and $192.8K for the improvements). However I think this is a case of lazy land assessing because all lots on this street regardless of size only range from $72.5K for .378 of an acre to $77,800 for .895 of acre.
My rough guess is that the land is overassessed. Even out in horse country land is being assessed at $70K an acre. So to be generous for .378 an acre I would put the land at $26.5K. The house value is completely depreciated and is probably only worth $50/sq ft. At 2,264 sq ft I would put the house value at $135.8K.
I think a fair price would be $162.3K ($135.8K for the house, and $26.5K for the land). What do you think?
Let me know your thoughts about the $162.3K price. Below the post you will see three boxes that say: Worth More, Priced Right, Worth Less. Give me feedback if you think the house is Worth More, Priced Right, or Worth Less than $162.3K.
Feel free to add a comment about the property as well.
Posts
You're on the right track. I've been here for 12 years and seen prices triple in many places.
ReplyDeleteHave you thought of taking a crack at some of the battered farmettes offered at high prices? Albemarle has a few with acreage but the homes haven't been updated since the 40's(1940's) some literaly falling to pieces and lacking outbuildings to easily revive farm lands. I'm just not getting how the assesments are derived in rural parts. Thanks a bunch, I read you all over the place.
Leave a comment with an example, and I will take a look at it.
ReplyDeleteHere are a few things I've been keeping my eye on for a while. These for the most part aren't pretty properties. (the older the better) I rehabed older houses in DC in the 90's so I see past the years and know what I'm getting into. That said, I'm seeing the price and elbow grease for us to pull the homes and land back into usability. The 2 higher priced of the 4 they admit they are pretty much selling the land. You can take your pick: 456041,436359, 462499, 461933. Green acres all over again.
ReplyDeleteAre the 2003-2004 assessments about right? I see you used them for the Mont Farm Rd. property and othere mention that as a ball park for figuring where current values should fall. Thanks again.
PRE-CRASH pricing...you're exactly right. THAT's what sellers aren't realizing around here...a "comp" from before 9/08 MEANS NOTHING.
ReplyDeleteMortgage lenders know this, appraisers know this, and buyers know this.
Local info on comps in a declining market:
http://realcville.blogspot.com/2008/10/charlottesville-albemarle-area-real_31.html
local info on the region's economic data and WHY BUYERS ARE PRICED OUT OF THIS MARKET:
http://www.realcentralva.com/2009/03/26/caar-economic-summit-localized-market-data/