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Ok, so we're 2nd time buyers looking into some of the good areas in Northern Nj with train access, good downtown and overall good long term investment, up to 700k-- 3br, 2bth ...not needing a huge lot. Sites like Zillow allow you to look at last sold prices and dates. So here's the question(s)
1)If you see a great potential home BUT it's gone thru 3-4 hands in 10 years..walkaway?
2) If you have a buyer who's purchased 05-09, for the most part should that 'new sale' not be a flat price relative to your new offer? or would you take the home and apply an '02-03 price?
3)what about taking a home that was sold in 03' and just applying a 3% increase year to year? Is this not a fair way to look at a good asking price?'
I know comps are essential but I have a hard time with a sale in 2006 who now thinks it should be worth even 1% more! Are these well to do towns exempt from this rule? (Ridgewood, Westfield, Madison, Chatam, Millburn)
You shouldn't care what someone else paid for a house. Someone could have greatly overpaid or underpaid at some point in the past anyway. Base your offer from current conditions.
You shouldn't care what someone else paid for a house. Someone could have greatly overpaid or underpaid at some point in the past anyway. Base your offer from current conditions.
hmm, while my 50% agrees with you, the other 50% says BS. A 2006 sale brings a certain stigma that you purchased in an inflated market. It's the same reason why I took a loss in 2011 for the sale of my 2006 purchase. What about a listing that's gone thru 2-3+ sales in 10 years OR a home purchased in 09 or 10 and now for sale? That makes me think, what's wrong with this home?
And that is why you would do your due diligence. People need to sell houses for all kinds of reasons. Just because a house has been sold a few times doesn't really mean a whole lot.
If you find a house bought at the hight of the market and you see current comps going for the same amount, guess what? That is probably what the house is worth.
You can't escape a premium on location and that is a completely subjective variable... so I think you're expending a whole bunch of energy trying to make the "value" programmatic. If it was possible, sites like Zillow would work - which they don't. They can be way off.
If you want a specific area (i.e. the towns you listed), then you're constrained to what's available in those school districts and the recent comps. Unless of course you're an all cash buyer and can get in on the real deals. Otherwise you have to shop MLS like everyone else. Educate yourself on what is a "good deal", so you'll know it when you see it. Waiting and avoiding having to settle is not the worst thing you could do.
Location: When you take flak it means you are on target
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No, it is reasonable to have several sales in 10 years, particularly if foreclosed. Let's take a hypothetical subdivision house built in 2001. Sold by builder (1) to the original owner (2) who flipped it a year later when the subdivision was finished for a 20% profit. Owned by next buyer (3) until 2005 who sold for a 100% profit to a flipper (4) who updated and resold for a 50% profit 6 months later to a buyer (5) who rode the boom and refied in 2007 pulling out an additional 50% profit and by 2009 couldn't make his payments and lost it to the bank (6) in 2010 which sold it at a loss to an investor (7) for the 2001 level price.
One home I lived in had 13 owners in 46 years in a very desirable town -- average ownership was barely 4 years, another home right up the street was just on it's second owner. The sytle of the homes was identical and they were both buyout to similar standards. The place that was on its second owner was also fixed up "all at once" to about the same degree .
I've similarly seen some "flippers" that honestly can take a property that has been neglected for decades and bring it up to date in weeks with work done according to codes and with care that I would have reservations recommending or buying at the right price.
There are other places that have such glaring flaws or poorly performed renovations that unless the price is far below the costs that would incurred fixed the problems I would recommend taking a pass on them.
Anyone who goes by "rules of thumb" in such situations will end up LOSING.
You need a top notch inspection after you make an offer on any such place. In fact before you get to the offer stage you need to have your head screwed on straight -- if the price is too close to your "ceiling" you are wise to think about the "worst that could happen" in an inspection. If the place is all cosmetics and having all that lipstick on pig blinds you to money eating problems and you do not have the knowledge to be shopping for such properties nor do you have an agent to lookout for your interests you might rethink your strategy...
On the other hand if the sort of poking around that any decent real estate agent should encourage is part of your "standard walk through" you ought to able to rule out the obvious "big money" fixes that most flippers do avoid -- roofs, electrical, plumbing and structal issues PRETTY MUCH ALWAYS have some visible tell tale give aways -- if you do see some things that raise your suspicions and you then write on offer it is wise to plan what sorts of costs would make thiscdeal DEAD and what sorts of costs are worth bringing up with the sellers...
What it might shgow is a pretty unstable neighborhood. I many areas there are sub-divisions that have complete trunovers in ten years. Often these are cookie cutter type starter homes.Lo at the sales i recnet years to judge this.
I've similarly seen some "flippers" that honestly can take a property that has been neglected for decades and bring it up to date in weeks with work done according to codes and with care that I would have reservations recommending or buying at the right price.
There are other places that have such glaring flaws or poorly performed renovations that unless the price is far below the costs that would incurred fixed the problems I would recommend taking a pass on them.
Anyone who goes by "rules of thumb" in such situations will end up LOSING.
You need a top notch inspection after you make an offer on any such place. In fact before you get to the offer stage you need to have your head screwed on straight -- if the price is too close to your "ceiling" you are wise to think about the "worst that could happen" in an inspection. If the place is all cosmetics and having all that lipstick on pig blinds you to money eating problems and you do not have the knowledge to be shopping for such properties nor do you have an agent to lookout for your interests you might rethink your strategy...
On the other hand if the sort of poking around that any decent real estate agent should encourage is part of your "standard walk through" you ought to able to rule out the obvious "big money" fixes that most flippers do avoid -- roofs, electrical, plumbing and structal issues PRETTY MUCH ALWAYS have some visible tell tale give aways -- if you do see some things that raise your suspicions and you then write on offer it is wise to plan what sorts of costs would make thiscdeal DEAD and what sorts of costs are worth bringing up with the sellers...
There are some good flippers out there who like to do things right. Unfortunately there are many out there who buy for too high a price, realize they are in over their heads, and resort to slapping a lot of lipstick on!! For those bad ones they can put all the lipstick on they want but it still sqeels loudly!!!
If you are going to look at flipped properties I would make sure your agent has either sold or shown LOTS and LOTS of these homes and knows about home construction by having a proven background in it. They also need to be honest and willing to point out where the lipstick has been placed!
Once you do pick a flip home definitely have it inspected by a professional. There are too many potential problems with these flipped homes that even you and your agent might not catch with just walkthroughs.
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So many variables....
