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Saturday, November 6, 2010
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29 comments:
Question about assessed value: The assessed value (for tax purposes) is based on square footage of the property/house, certain improvements, etc, right? Not the same thing as an appraisal, which is actually based on the condition of the house?
I ask because a neighbor is selling their house, which is going to need a partial gut (it was a rental duplex, and half of it was trashed). They're pointing out that their asking price is about 10% less than the assessed value. I'm thinking their asking price is high, given the state of half the building, and since it's FSBO, I don't have a realtor to play hardball for me.
Opinions from those of you who have done this before? (Suggestions on how to lowball the guy who's been my neighbor for 10 years without hurting his feelings also welcome...)
I've not done this before, and I'm in the market for my first home, so what do I know?
But if they don't have an agent to help counter their (potentially high) expectations for value, maybe getting an appraisal done before you make an offer would give you some peace of mind and/or leverage with your neighbor.
Just because they are FSBO doesn't mean you don't get to have a realtor. They might not be offering realtor commission on the sale, which should further lower the price of the house. That would mean you'd have to pay your buyer's agent yourself though.
Also, assessments cost a few hundred dollars - so that's a lot of money to waste if you're pretty sure it's going to come in lower than your neighbor will accept. Of course, you always have the option of waiting him out and seeing who is right about the price. It worked for us after our first offer was refused, but maybe we just got lucky.
I meant appraisals above, not assessments. Ours was $450 through our lender - I'm sure you can find cheaper but your lender might make you pay for another one with their approved appraisers when you apply for the loan.
Dave, assessed value also includes the area and land values. You need to do your own research by finding sold comps. Most people here use frankly to find comps. bedrooms, bathrooms, finished basements lots of things play into assessed value.Just off the top of my head without knowing the area, 10% below an assessed value sounds like the needed improvements have been considered into the price.
Dave
Assessed means nothing.
Also if it's damaged its lowred in value a lot.
Jeremy, my rationale for considering the appraisal in this case is that Dave's known the seller for 10 years.
Yeah, may not be worth the expense, but waiting it out has its risks too. Guess it depends on how much Dave likes the property!
"Prime" history over the past two years.
Out of curiosity and with a desire to look at presumably "prime" loans and the higher tier, I did a quick review of my zip (20194).
I looked at listings above 800K. 72 sales in the past two years. Only 2 shorts and 2 foreclosures.
Currently, there are 9 properties available. One is a short.
I don't know how many were listed and then withdrawn. But implicit in a withdrawl is a lack of duress.
Unless the higher tiers are yet to be impacted by reo's and a "wave" is coming (for what reason I can't guess), I see overwhelming stability (at least in N. Reston).
newbieinNoVa, I wasn't trying to imply that your approach wasn't a good one - just pointing out that it does cost money and may not be fruitful if the owner won't budge on price at this time. Most take a little while for reality to set in.
Dave, one other factor is that, at this time of the year, many county assessments are as many as 18 months out of date. For example, in Arl. and (I believe) in FFX counties, assessments will be released in early January or later. These are based on houses sold July 1, 2009-June 30, 2010, with some adjustments for sales after that time. So if your neighborhood not too many houses sold after the summer of 2009, and if house values are declining, then the current assessed value will generally be higher than the the current market value.
NoVAwatcher linked us to research he had done showing a strong, lagged relationship between assessed values and later selling values. But yes, any factor that is explicitly ignored by the county that could affect market value, will not be reflected in the assessment. FFX tries to ballpark the condition and busy-street-location etc., in its assessments. Other counties (e.g., Arl.) do not. And even in FFX, if a seller has made big improvements but doesn't have permits (required or not), especially if no square footage has changed, his/her house will likely sell over assessed value, whereas the situation is different where permits may have cued the co. in to reassess.
If I were you I'd go online to your county's website and see how they do assessments, then adjust from there.
I agree with others who say that your neighbor will likely not be ready to accept a low (but possibly market) offer at this time. I've seen a lot of real estate shows that claim (FWIW) that FSBOs are almost always over-priced, sometimes substantially, when they first come on the market.
In this particular case, the assessed value of the house in question is actually higher than the assessed value of some of the nicer neighboring houses in the neighborhood (especially recent same-block/similar-size comps). The valuation is a puzzlement.
"Waiting" isn't really an option. The guy who owns it plans on letting it sit on the market for a couple weeks, and if there are no nibbles, try flipping it (presumably to sell at a significantly higher price).
Dave says:
""Waiting" isn't really an option. The guy who owns it plans on letting it sit on the market for a couple weeks, and if there are no nibbles, try flipping it (presumably to sell at a significantly higher price)."
Huh?
If he can't sell at 510K, then it will clearly sell at 650K?
Relax, the guy is going to screw the pooch and you can utterly profit.
He wants way too much for the condition it's in, he will then do 30K in Repairs and add to the price, but the property will be stale.
He will then chase the market down.
The market is going nowhere fast.
All the low hanging fruit dropped in 09 with the crazy credits, now it's slow and painful as more and more properties stand on market and foreclosures continue dropping on the market.
Does anyone have advice on furnace service contracts? Or recommendations for NoVA companies that provide them? The new place is heated by a natural gas furnace and our inspector recommended we have the furnace cleaned. It is from 1993 so getting toward the end of its life, but I'm hoping it keeps working a few more years. My in-laws had an oil burning furnace and said a service contract was very important. Is it the same for natural gas furnaces?
What do you do when you're trying to sell a house so huge and ugly that
--the house you bought was the subject of a WaPo article on horrible in-fill
--the neighbors organized to pressure Arlington to do something
--this led to a comprehensive set of restrictions on all in-fill
--you swooped in hoping to finish it and flip it, but you ran out of money and never had taste, so the finishes are not what people would want
--you have been sitting on the market for <$1 mill. for 6 months, partly because all of the above, but throw in a busy corner location and no garage to make it even harder?
Easy. You raise the price 50%.
27th
Jeremy, annual maintenance is more important on oil than on gas furnaces, but I'd say it's important on both, especially with that age of furnace.
I've had good luck with Chandler's HVAC (also Chandler's plumbing). Their service contract isn't as good as it used to be, but it also gives a small (10%?) discount on repairs that are needed. And if you need service on a Sunday, I think they put you higher on the scheduling list.
You may want to consider replacing the furnace this year due to the federal energy tax credits. If you do, be sure to get a unit that qualifies. The furnace company can tell you which ones do. Also, if you may have to replace the A/C later, be sure to get one that can be integrated with A/C units that will qualify, in case the credits continue when you're ready to do that.
Jeremy,
M.E. Flow. Annual service contracts are a good idea. Your furnace could last alot longer than you think.
ace-
Wow that is a large house...I'm not sure that many people want to own a house that is set up to look like a museum. Although I am sure their pricing strategy is solid.
Ace,
was it a failed short sale attempt at the $1MM price? i've seen a couple of such price movements once they're either no longer a short sale or with a newly approved price.
here's one:
List Price: $749,000
Original Price: $249,000
MM,
It may be. But I doubt very much that they will get anywhere close to the new asking price. It seems to me that if the <$1 mill. was too low, they would have gotten multiple bids well above that amount a long time ago, and a rational bank would have accepted one of them.
The problems with this house really cannot be easily remedied. The extreme house size actually works against the seller as most people with over a million to spend (plus the amount they would need to put in nice kitchen cabinets, make the space livable, etc.) typically are not going to want to spend the money in the ways this house will require and won't want the location, etc. And, people who want that much space probably don't want/need Arlington.
I don't find service contracts worth squat.
On a gas furnace, there is very little to do. Especially a modern furnace, with computer controls.
If you are handy, change and clean the humidifier, the filters, and give it a start check.
Gas furnaces are clean, they have sealed bearings, and are bsically trouble free.
http://www.washingtonpost.com/wp-dyn/content/article/2010/11/08/AR2010110806583.html?hpid=topnews
20-50% of foreclosures are being dismissed in the NYC area?
Wow
pat,
It's happening in New York. 'Nuff said. It's surprising CA hasn't jumped on the band wagon.
btw - DC "smartest" city in the nation.
btw, I had a $500 repair bill on a gas furnace yesterday. A servicing would have prevented some of this. The furnace had been knocked off kilter, so some stuff got fried when it was turned on for the season. This was an unmaintained reo. I should have had it serviced a couple months ago.
From that NYT article:
"That didn't mean the borrower, Lovely Yeasmin, a 28-year-old cashier who immigrated from Bangladesh, got her three-story townhouse in Brooklyn's Bushwick neighborhood for free. Wells Fargo, the mortgage servicer for HSBC, has not appealed the case. Instead, it has offered to temporarily lower her monthly payment from $4,700 to $3,000"
How much do cashiers make in Brooklyn?
oops, I mean 'Washington Post article'
LJJ-
Probably not enough to pay the mortgage bill on her own. Although if there are 3 or 4 people who are all working and living there the payments would be a lot more manageable.
Oh I know HB, if it's a three storey house in Bushwick it's probably a brownstone, and there's no doubt half a dozen or more people living there.
What I was incredulous about was that it looks like she has a $4700/month mortgage in her name on a cashier's salary.
I know this kind of situation is what caused the whole mess, but everytime I see an actual case, with a name and an occupation like that, it still boggles my mind.
The bad thing about that article if you ask me is that it's going to give some desperate people who are deep in the hole false hope - it's quite cruel when you think about it.
hb,
are you watching the prices of some of this stuff - gold, oil, cotton, copper, sugar, etc.?
Still think double digit inflation is impossible?
Blogger pat said...
http://www.washingtonpost.com/wp-dyn/content/article/2010/11/08/AR2010110806583.html?hpid=topnews
20-50% of foreclosures are being dismissed in the NYC area?
Wow
These are statements you can take to the bank...pun intended:
-Water is wet
-Fire burns
-Banks always get their money.
Just a matter of time is all.
If you want to see 1932 again, just watch what will happen *if* the banks don't get their money.
There is no other system like the financial system that can quickly put its foot on the neck of an economic recovery and make Washington sit and beg as fast as the banking industry can.
Robert-
Yes I am watching all of those and anything is possible, but yes I think it is very unlikely we will get double digit inflation. The dollar is getting its butt kicked, which is causing inflation in commodities. So yes this will add inflation, but the economy is still very weak wages are growing very slowly and there is significant overcapacity in most industries. Seeing that commodities are a small percent of most goods I have faith that the weakness in the general economy will overwhelm the strength in commodities and keep inflation in the 0-3% range over the next few years.
If you want I can list a lot of things where prices are flat to down including natural gas, clothing, electronics, rents...
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