Advice on possible deal

[Lisa Araujo]

Hi,

I have been analyzing a property and I am hoping to get some advice.

2 bed/1 bath SFR is listed as 1338 sq feet on the MLS but according to the property appraisers office is it really only 840 sq feet under air. They have added the outdoor/indoor patio space as square footage. It is listed at 325,000. I looked at comps in the area and the average price per sq ft recently sold for similar properties average around $220 - $231 a sq ft. I did see 1 property that was 740 sq ft and it sold for 340 a sq ft. 2/1 SFRs on the same street are valued around 219,000 - 244,000. They are basically in the same condition as this property.

This home last sold in Oct 2020 for $279 per square foot. This home seems overpriced to me based on my research. It is not remodeled. It is move in condition but the kitchen/bath and flooring is outdated. It does have a new metal roof that was replaced in 2018 and newer a/c. 

My question is if I do decide to make an offer, how should we approach the discussion about the difference in square footage and what I believe the home is worth? My son is a new realtor and does not have much experience yet in negotiations. I think the home is worth about 245,000 - 252,000. There is a tenant occupying the residence right now and the home is not available until November which is ok with us. My husband and I will move into the property so it will be our primary and we will rent out our current home. It has been on the market for 32 days.

My plans for the home is to add another bedroom/bathroom to make it a 3/2 and also add an ADU in the back. Looking into Homestyle Renovation Loan or do straight FHA loan and then get renovation loan after closing. I have spoken with a couple of contractors who have done the Homestyle renovation loans in the past and are willing to work with us. We have also received some lender referrals that specialize in the HSR program.

Based on the BP calculator, it should bring good cashflow after expenses once the bedroom/bathroom is added and ADU.

Sorry for the long post.

Any insight is greatly appreciated!