Generally a low cap rate market is because of anticipation of increasing rents and appreciation where high cap rates reflect little change in either rents of value.

Do you know if the appraisal was ordered to reflect the "as is" condition of the property or "subject to completion".  

But to avoid offending the seller, you might use some objective numbers, perhaps even get bids for the roof, hvac, and others (the basement water issue could be quite major to do properly)...Those could get into the 10K-20K range.... and an offer adjusted to reflect those objective amounts would help justify why you are offering 50K, for example, and not 71K....

Do you believe it's an accurate reflection of the value?

Any reserve money for taxes, insurance and capex reserves all came from our side.As a CPA that understands financials, also I have bought and sold over 1000+ units, I haven't ever seen where the cash reserve amount would be reflected on the P&L as it a balance sheet item.

The previous owner paid $69 for the same home (we paid $48) and I believe their taxes reflect the higher price.We're about to do our due diligence and have an inspection, including an HVAC inspection on our old furnace.  

Just make sure the monthly rent amounts you are inheriting are reflective of what the market is saying they should be.

Before clients agree to a purchase price they think reflects a property’s distressed condition, offer them this checklist of items to consider along with an appreciation of what can happen once the acquisition has closed.

Great Andrew thank you your budget cost sheet use them for referenceBtw how do you find the figures from homeadviser are they accurately reflect the true market price?

Items included in this would be welfare/cash assistance/child support/TANF then minus expenses she claims like childcare etc but you can ballpark it until you get thee official amount and then back adjust the tenants ledger to reflect the correct amount.