MA FSBO Single Family in good location - need advice

[Rachel L.]

Hi BP community -

I'm new to real estate investing and this is the first house I have looked at to use to learn how to crunch the numbers. I would like advice on how to proceed, if this would be worth any further time.

This is a FSBO single family, 6 br, 1 bath. 1st floor is kitchen, living, dining. 2nd floor is 1 bath, 4 bedroom. Attic (finished) 2b bedroom. Unfinished basement. (The bedrooms are small though).

The owner had a print out from Vision Government Solutions, Inc. Has anyone heard of this company and if so, are their appraisal amounts accurate?

The appraisal from that company came out to roughly $270K and there aren't any 6 bedroom/1 bath single family houses in the neighborhood. There are some single family houses with roughly the same amount of living area and less bedrooms and 2 baths. Would those be considered comps close enough?

Also, the owner is asking for $540K (least she will take is $500K). She's basing this number off a duplex sold with 4 bedrooms/2 baths that's a few doors down and was recently sold. She said that she will list the house with an agent if the house she can't sell it herself. Would it be worth my time to educate the seller why comparing her house to a duplex isn't going to give her the right value for her house? Should I even try to put in an offer?

Any advice would be helpful! Thanks in advance!

[Stephen S.]

As an interesting parallel - in about 1980 I was looking for a small house for myself: small yard, garage, cellar, useable attic, two or three bedrooms, LR, DR, Kit, gas heat - maybe 800-900 square feet. I didn't want to pay over $30K. I settled on buying the exact house I was born in - as it fit the wants-list perfectly. My parents had owned it from 1948 to 1958. <g> But the seller and I were about $1000. apart with hope dimming for a compromise. A block away was another house for sale. This other house was about 3000 square feet with a full cellar and attic. The entire south end of the house was a library with floor to ceiling shelves. The carport alone was over 900 square feet - it alone was bigger than the entire house I said I wanted. <g> The property footprint was the entire block - just under an acre. Every previous owner and their wives had died in the house and the last one had been an internationally dealing child pornographer. His heirs had the house for sale for $99K originally. On the market for over 500 days without offer they had decreased the price by the time I saw it to to $69. The Realtor told me later that I was the only potential buyer who ever walked into the house. Most had looked from the curb and said no. A few had gotten to the front door - but then always balked at going in.

The house was everything I didn't want - oil heat, big; thirteen rooms, a huge property to mow and maintain, over 500 feet of fence to paint, no garage, etc. The interior was all varnished solid wood. Hardwood floors, the walls were clear cedar and mahogany trim. I admitted to the Realtor that I liked the place but . . . how much? How much? How much?

Finally he came out with the "recently reduced to sixty nine nine".

What? What part of "thirty K is my maximum" did you miss?

Well; you could make an offer . . . .

OK; $30K

They'll never take that! And it comes with all this land - right in the middle of town - those extra building lots could be sold - this could be a great deal for you.

OK; I don't care if they take the offer - I don't really want the house anyway - it's your idea to make the offer.

So back and forth, I offer $26K, and end up buying the house for $31K - after almost a year of negotiating, by mail, with the heirs in California and Nevada. After the agreement is signed but before settlement I get the property subdivided and secure the loan with only the house on a smallish lot - 90 by 135. So after settlement I own all the rest of the block outright. A big portion I sold to a local church for $35K.

So I ended up owning the house for nothing. I still own it today and have lived in it at various times. It is somewhat different now as it has two full baths and one of the seven bedrooms has since been turned into a sort of laundramat with two washers and three dryers. A substantial part of why I still own it is . . . . nobody wants a large six bedroom house. <g> Most especially in a neighborhood of smaller houses.

Be careful about those 'good deals' you find - always think out your exit strategy carefully Before you buy . <g>

stephen

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