Re: Help: FMV for a White Elephant? (long) - Posted by JPiper
Posted by JPiper on January 20, 1999 at 22:14:17:
You?ve got yourself one this time don?t you??
In my area there are a lot of properties that don?t really fit in?.this tends to happen in older neighborhoods. Large differences in the comps without being able to recognize why someone paid one price versus another. I like this?.it means it?s going to be difficult for everyone else?.to include the appraiser.
The appraiser, as you know, is apt to look at the property from the standpoint of square footage, bedrooms, etc. This could work to your advantage. On the other hand, the property clearly has disadvantages which you have enumerated.
What I would do is to compare the property to the worst properties in the neighborhood, and use the ?uniqueness? of THIS property as a justification as to why I picked those as comps. What I would not do is compare square footage. Later, when I?m selling, I would focus more on size.
When I?m confused I tend to get even more conservative than normal. I give the worst case scenario to everything. So in this case I would assume a longer sale period, higher carrying costs, higher fix up, etc?.all starting from a lower fixed up market value. Assume the worst.
Worst case scenario is that you end up with a property at an extremely low price. Naturally you will have a contingency to walk away with, or perhaps to renegotiate with if you need to. This type of property I don?t worry too much about if I don?t get it?.and this attitude will give you the power to negotiate a very low deal. Again, later if you get it, you switch hats, and talk about the square footage.
I think some of the concerns expressed below are important. I would definitely be concerned with the title situation regarding the deed to the son, and relative to the medical expenses. Timing of this deed might be important?so check the title closely, and perhaps discuss it with an attorney. Make sure you run down all the details.
By the way, make sure you check out that land loan as to it?s existing balance and terms.
This is just like any other deal. It?s a question of checking out the details, and in this case being overly conservative in your estimation of value due to the non-conforming nature of the property.