I agree with Natalie’s take on this. You will also need to find out the percentage of investor owned units in the complex. Many lenders will redline the complex if it surpasses a certain percent of NOO units. Citibank, as an example, limits OO loans to less than 39% NOO units. Above that their undewriters will TD your buyers loan. Not all lenders use the same criteria, but you don’t want to be blindsided on this issue.
Additionally, I’ve found that when selling with 75% of the work done most of my potential buyers didn’t understand the potential the place will have when completed. So if your holding time is factoring in a buyer contracting at your 75% completion stage, you may want to rethink that position. HTH
I’m looking at a condo under foreclosure and I’m trying to figure the ARV. Take a look:
Condo #1 - SOLD for $158k on 10/28/05 after being on market 91 days. Condition: ?Completed updated unit, new carpet, new bathroom and new stainless steel appliances.? [MLS]
Condo #2 - PENDING with the listing price at $159k (only on market for 10 days) - under contract 2 weeks ago. Nothing specific on the condition of the unit.
Condo #3 - PENDING with the listing price at $134.9k (on market for 8 days) - under contract a month ago. Nothing specific on the condition of the unit.
Condo #4- SOLD for $195k on 3/4/06 after being on the market for 206 days. ?2bdrm townhouse;Hardwood flrs,ceramic tile kitchen and bath; w to wcarpet in bedrooms.?
I?m trying to use the above information to figure out what the ARV of the condo unit would be. I?m thinking that if I replace everything (floors, kitchen appliances, bathroom) the ARV should SAFELY be around $170k. I want to disregard the $195 comp. (somewhat) when estimating my sale price if I was looking to get it under contract within 30 days. There are no other units in the complex for sale. What would you guys estimate the ARV to be?
I would call those listing agents and learn everything you can about the complex and the condition of those units.
I would throw out the comp for 158k on 10/28/05 (too old).
I would also throw out the 195k comp (too high – you need 3 comps too make value, one won’t cut it).
That only leaves you with the 2 pending comps. They are also the most recent. I would talk with those agents and find out when they’re closing and what price they’re closing at. There’s got to be a reason for the difference between 135k and 159k.
I wouldn’t feel comfortable at 170k in this scenario. Without any other information, I would call it 159k.
The location in the complex means a lot. You probably won’t get the same price per sg ft for a unit that overlooks a noisy playground or trash facility as you will for one that has a good location within the complex. People pay for views, and this can determine value as well.
Are there other things you can tell us about this property? Your market? Your holding period?
The location is good. The complex itself is in a nice area but this particular unit overlooks a nicely manicured front lawn. The whole place is pretty quiet.
The market here has slowed a bit but things are still moving at the right price. The market for this condo is good as it is in a desirable section next to major highways for commuters to NYC. I want to get this under contract to sell within 30 days of me completing 75% of the work. I can’t see this being more than a 10 day rehab if I coordinate the contractors correctly. Thanks KJ