All other factors excluded, this is based soley from the numbers:
County assessment - $88,000
County Market Value - $160,000
Comparables - $206,000
Bank willing to take - $103,000
So, getting it at $103,000, adding in $20,000 just in case, selling at $140,000 - Is this a “sure thing”? Or do these numbers not add up all that well?
What is “county market value” and where did you get it? If RECENT sold comparables are $206K, then the market value is $206K. What are the average days on the market in your area? Are any repairs needed to make it ready to sell?
County Market Value is the value that I believe the county appraiser “guestimates”? The county includes it right next to the Assessment Value. The percentage difference of the County Market Value fluctuates wildly. My home’s county Market Value, for example, is about 50% above Assessment Value. Whereas this house I’m considering purchasing is nearly 100% above Assessment value.
I had my wife (a realtor) pull comps last week. She got 7 total that varied from $185,000 to $289,900. They were all sold comps. The time on market for those was about 60-90 days.
Repairs include typical carpet, paint, cosmetics. The house is 41+ years old. Possible leak in garage roof (hasn’t visibly entered house yet). About 1 foot square patch of visible mold in basement wall near where the washing machine leaked. The mold is on the opposite side of the wall where the washing machine is, so its traveled through the wall.
The only true comps that are reliable as value estimates are recent closed sales of similar properties nearby the subject property. When estimating what repairs might be needed always err on the side of overestimation. If you are wrong the difference goes in your pocket rather than out of your bank account if you underestimate.
Dean - have your wife checked to see if those 7 properties were all retail sales? In my area and in the price range I am looking for (houses around $40k to $50k) the majority of sales are foreclosure and REOs. There are very few retail sales where one owner sells it to another.
The foreclosure “sales” are no good - they are usually reported based on the amount the previous owner owed on the property (which is typically higher than the value of the property). I would discard them.
REOs are more difficult to deal with. But considering that they are usually lower than market value, you would be safe in using them in your comps because they would pull the average down. In my case I review the original listing for each comp and if it states that the property needed some repair I typically add 30% to the price for my comps (considering that most REOs that need repair are sold at 70% or less from ARV).