Do you think this is worth a deal?

Question

I may have a possible deal, but im not sure if it'll be worth it?..
 
The property is worth $213,290 and recent sales comps shows a house next door sold for $128,500 and others like zillow.com shows comps between $183k-190k.
 
And they have 1 mortgage for $58k and the other mortgage for $227,200.
 
Do you think its worth doing a deal? I plan to offer him $127,900.

Jon Holdman · Answer

County records are useful, just not the assessed value.  At best, assessed values are out of date.  They're done for purposes of taxes, not selling.

None of the sites you mention will give an accurate value.   You have to learn the values yourself.  All those sites, and county records will give you "sold" data for nearby houses.  Find all the recent, nearby, similar solds.  Ideally, under 90 days, similar square footage, same beds and baths, and in the same neighborhood.  No more than about half a mile away.  Drive around in the neighborhood and figure out which houses are nice and which are dumpy. Drive by the solds.  Look inside as many houses as you can - dozens or a hundred if possible.  Once you have a feel for a neighborhood, you'll know what its houses are worth.

Some title companies will give you access to their data.

You say the house next door sold for $128,500.  If that's a similar house, and lacking any other data, that's what this one is worth.

Keep in mind in many areas there are lots of foreclosures.  These are often in poor condition, and sell in one, low range of prices.  Then, there may be nice, move-in-ready houses that sell in a higher range.  For ARV purposes, you need those pretty houses as comps.

Jon Holdman · Answer

Don't use the county records to determine values.  Nothing wrong with pursuing this one, just realize its going to take a while. Work on others at the same time.  Since most of the deals you start will end up not going anywhere, you need to always have a bunch in progress.  In sales that's called "the funnel".  You have to keep jamming deals into the wide end of the funnel to get a few to pop out the spout.

Courtney S · Answer

Ok so what should I use to get value for the property? I usually use county records b/c it gives me the owner's name. mailing address. and I can find out other info.

Some ppl say to use zillow.com or cyberhomes.com but which is the real value? or at least close to the real value?..So thats y I use the county information.

Courtney S · Answer

I got the $213,290 from the county records website which is a 2008 market value. It obvisiouly has dropped because they paid $284k

The website showed that last year the house next door sold for $127,500, I dnt know whats the market value for this home.

But like I said I may pass this up..If its goin to take 4-6 months for my first "payday"..Im just goin to concentrate on doing wholesaling..But for some reason Im not gettin any sellers calling...Ive tried contacting absentee owners, etc..but nothing,,,

Courtney S · Answer

The mortgage $227,200 was recorded first so that'll be the first mortgage and the $58k mortgage is the second one...Is it true that a short sale could take 4-6 months to close??

Charles Whitaker · Answer

Courtney,

"The property is worth $213,290"

I take it that this ARV is from a realtor and not very realistic. Why is there such a spread between this house and the neighbors house.

In this market you need to KNOW whether a deal is a deal. That number seems artificially inflated and how confident are you that you will actually sell at that price.

You don't want to lose money on your first deal, or any deal for that matter.

Michael Culler · Answer

If that is a small first mortgage, and a huge second mortgage, you may want to make this your first short sale deal.

You may have stumbled onto a payday here.

Courtney S · Answer

Ok everyone is saying I may have to do a short sale cause my original plan was to just wholesale it. And I know what a short sale is and what papers may be required. But of course never done one.

And Im not sure if the mortgage companies would even accept a short sale. And I dont know how long it will take to close on a short sale...

I think I may pass this up.

Michael Culler · Answer

Is that a small 1st mortgage, and a huge 2nd mortgage?  If so, this may be a great Short Sale for you.

Is the property next door that sold so cheap a possible comp?  Is it way smaller, or a different type of construction?  Why is it so cheap?

I agree that you should get an appraiser to do look ups, Or a Real Estate Broker to get you a CMA.