All Forum Posts by: S R Scearp

A follow-up to my own post and I will try to address the issues other people raised:

The City's "full market value" I referred to- I don't know what entity determines this number, I assumed it is determined by the City, not the County, because it was on the City's website. I was told by the current owner's that this value has increased since they finished their renovations. My impression of the owner's is that they are trustworthy and honest.

To my knowledge, all renovations were properly permitted and inspected by the City Code Officer- they mentioned him by name without me asking, and I happened to recognize his name because I've dealt with him in the past. The wildcard here is that much of the labor was done by the owners, their family, and their friends and members of their church, some of whom are professionals. I was impressed with the quality and scope of the work, but I'm not experienced enough to judge the value of this work, especially since the labor was more or less free. The materials they chose while not top of the line were also not low-budget products since they have been living here for the past 4 years. Key item for me is that both units are in move-in condition as I don't have the time or experience to renovate, so I'm willing to pay a premium for that (this property will be owner-occupied by necessity, I am negotiating to buy another property at the same time).

The exterior issues are mainly cosmetic and repairs can be put off until next year, but there is some rot on the wood porch.

I understand that an appraiser is not an inspector and vice-versa.

I paid to have an appraiser give me a report on the property. I'm not particularly concerned about the expense, and I will definitely make the contract stipulate that it will require an inspection. The appraiser's report came back at $135K, which surprised me. I am going to see if I can track down some comp pricing. I am meeting with the owners later this week, but I still have to figure out what I think I can reasonably offer them.

I think the asking price is fair for the area, the lot, and the condition of the house, and my net cost when the upstairs is rented will be around $250/month after PITI, I actually save money since my current rent is more than that, plus I get all the tax incentives of owning. I was just looking to see if I can save a few grand with a lower offer, and what other people's thoughts were.

Thanks

Last weekend I looked at a duplex that is not on the market yet. This will be an owner-occupied building as I need a place to live. The asking price makes financial sense but as an investment obviously I'm looking for the best price possible. Here are some details:

City's "full market value": $97K
Asking price: $120K (this is typical for a duplex of this size in this area)
Zillow estimate: $134K (seems high given the local market)

The property was purchased 4 years ago as a foreclosure for $80K and has been extensively renovated and modified- on the interior only. The inside needs absolutely nothing as it was stripped to the studs and has all new insulation, doors, windows, sheetrock, most plumbing and almost all electrical. Genuine hardwood floors (not laminates) were installed in most of the downstairs and half the upper apartment. Downstairs kitchen is completely new. All appliances are no more than 4 years old (washer and dryer included in sale)

The outside is a different story: the porch needs extensive work, I need to have the roof structure inspected (the slate itself seems fine, and there are no water leaks evident). And the siding- needs to be removed and replaced over the entire structure.

The owners claim all the interior work done has only raised the assessment by about $8K to its current level.

I like the house, but really feel I need an expert opinion on its market value before negotiating with the owners on the price. Should I hire an appraiser? What would you do?

On a side note, since there is no realtors involved, is it fair to offer less by half (or more) of what the commission would've been had realtors been involved? Should I have the roof inspected before or after making an offer? Should I get an estimate from a contractor for siding replacement before making an offer?

Thanks for any input.

I am looking at purchasing the 3-unit that I've been living in for the last 6 years. The seller is not putting it on the market because he doesn't have a timeframe to sell, but at the same time he would prefer to get rid of it as soon as possible to finance his graduating son's future college education. The house was purchased from his in-laws as an investment for this purpose, and so they sold it to him very cheap.

In talking with an agent, they basically told me to make a low offer and hope the counter-offer was in the ballpark of what I find acceptable to pay. I asked if it would be beneficial to have someone perform an inspection and they advised me not to, since I would need an inspection performed to satisfy the bank anyways and not to pay for it twice; that anything found during the inspection could be re-negotiated.

Upon further thought, this doesn't seem to be good advice to me. Would it not make more sense for me to estimate a number the owner would counter with, then subtract what an inspection would reveal with respect to things that need to be repaired, and providing that information along with my initial offer in order to justify my calculation, rather than submitting something to my landlord that looks like someone just made a random offer? For example, part of the roof is in need of replacement, I would want to use that as leverage to reduce the sale price, but without an estimate I would have no idea what it would actually cost to do so.

The owner writes mortgages for a local bank, so he has a finger on the pulse of the local market (I will not be using the bank he works for). I don't expect he will hold out for top-dollar, but given the current local market, I know what I am willing to pay and I just want to cut down on the back-and-forth and sign an agreement as quickly as possible. I feel if I can show that my number is based on reality, he would be more willing to accept my offer, or counter closer to it, in order to sell quickly. He will be making almost 100% return even at a low-ball offer due to purchasing from his in-laws.

So, should I pay someone to perform an inspection on the property prior to making an offer, or not?

Thanks