Should I Accept This Offer?

[Eduardo A.]

I am trying to get my first solo project done. I believe its a VA foreclosure even though a BOA contact number was left on the garage door. Here are the details:

4 bd 2 bath
Full unfinished basement
Lake in back yard
Using HML for funding

Purchase Price 56k
ARV at least 110k (there is one comp on the same street at 189k)
Rehab 20k at most, the sheetrock and carpet work in the basement looks to be the most expensive part
I wanted 10 days due diligence, they won't go above 5. I would compromise at 7 but they said 5.

Cons
No utilities on for Due Diligence
Only 5 days Due Diligence
60 day no sale deed (I have to hold for 60 days before selling)
There is a billboard in the subdivision right next to the property. Has anyone had any experience with this?

I am considering backing out because I believe I need 7 days to get inspections and bids. What do you guys think?

[Jon Holdman]

Thats a problem, then. If you can't find comps, neither will an appraiser. On the deal I mentioned, when we initially funded the deal, there were comps showing around 213K value. When the rehaber defaulted, gave it back, and we finally sold it, the comps showed only 172K. Because it was on a busy street, only other comps on the same or a similar busy street were relevant.

You wouldn't necessarily need a comp next to the lake and under the sign. You can determine the effects of each independently. Find pairs of comps, one near the lake and one not but neither near this sign. Compare the values. That comparison gives you an estimate of the effect of the lake. Then find pairs of comps, one near the sign, one not and determine the effect of the sign. Subtract the sign effect from the lake effect and you have an estimate of the net adjustment of your house vs. one that's neither near the sign or the lake.

Any situation where you have a hard time with comps is going to be hard for the appraiser. Appraisals can be troublesome in the best of situations. When they're difficult, its even harder to predict the outcome.