Finding The Price
I've found a property that is lender owned and needs lots of repair. How much is yet to be determined since I haven't been inside yet. Regardless, the property is roughly 5,000 sq and was a historic mansion at one point. The asking price is 142k. After checking the auditors page, the market value is listed at 188k, but I've heard that number is generally low. This is often good because then you pay less taxes. Somewhere I remember reading that county auditors often appraise properties at 70% below what it would actually sell for. Basically how do I figure out how much this house would be worth once its fixed up? There are no houses like it to pull comps from. Should I just assume the 70% rule and take 188/.7? That would give me a end result of 265k. Any thoughts would be appreciated.
The most accurate way is to get a subject-to appraisal. this will tell you what it will be worth all fixed up
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Hello Jeffm_60
You need to a comp analysis. The tax assessment is not the way to determine FMV. There must be a comp in same zip code?? If not judge the comps of homes in the same area but adjust up/down subject to the difference between your property the comp. If this was easy eveyone would do it!
Yes you need to look at other similar homes in the area. If there are none, I might consider the use of a certified apprasier if you are serious. Tax rolls are a way to value a property. They are easily accessible and every idiot buying a house looks at them. If you know the market well enough you can begin to understand how the assessor values the property like they do and then use the same process to come up with a market value.
Remember: There is a range of what every house is worth. The value is subjective. Apprasiers tend to come in at the top of that giving a value that is the most any reasonable person may pay. It is my opinion that to be sucessful in investing we must sell our properties at the low end of the scale so that things move quickly for us.
Hope this helps...
If you don't want to pay for an appraisal right away. You could ask for a comp search from the appraiser, these are free and no money would be coming out of your pocket. That is what they do for a living DECIDE WHAT OUR PROPERTIES ARE WORTH who better to give you a figure????
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As crazy as this sounds there are not any comps in the immediate area. House was an old mansion that is now converted into a 4 unit multi-family. House is roughly 5,000 sf not counting the 3rd floor which is a large attice space that is half way converted into a 5th apartment. I'll give an appriaser a call today to try and get a free comp. We'll see what happens.
You might want to check into average cost per square foot for that area.
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