buying/looking at a property

Mr_Iowa · December 24, 2012, 11:51:22 PM

Not sure if i should walk away from this new property i recently looked at, thought maybe i could get some other view points on it. I was pretty excited at first. 4 acres, with a house, garage 24x24, steel shed 24x24, and the best part is it has a small cabin on the property as well!!!! she is a signal mom of 3 and just bought the house 2 years ago for 80k.

she now has it listed for 120k, and honestly i was complete fine with that because the assessed value of the home is 129K. However this place is destroyed, when walking into the house the smell of dog urine almost took my breath away. All carpet along with the plywood beneath it would have to be replaced. there where exposed wires that where stapled on the living room walls that went up to the ceiling fan light in the living room, and just a ton other problems.

i wasn't allowed in the steel shed, or cabin because she "rents" it. Not sure why she wouldn't have gotten permission for me to view those before hand but oh well. I priced the buildings all at around 10k each, and the land at another 10k (river bottom/flood plain), and the home at around 40ish. there is also a decent tractor that comes with the property as well. Anyway i threw out a number of 88k, but was told she has to much invested into the property (she put in a wood floor in the porch, but there are already boards coming up!) she also framed up a room in the basement.

I'd pay a fair price for this property, more then its worth. I know i could easily fix the cabin up and rent it out for an extra income, and in the end run make my money back (id live in the cabin while fixing up the house thought). I don't want to be rude and explain further for why i offered the number that i did, yet I'm not ready to walk away. Just seems odd to me that someone thinks they can get a 150% return on investment on a property they bought less then 2 years ago and completely trashed. given she has the right to sell her property for any amount she wants, just wish a new a way to get her to work with me on the price.

MushCreek · December 25, 2012, 06:37:43 AM

Unless property values are really shooting up there, I can't see how it could be worth that much more in 2 years. If she is the one that trashed it, and it was in better shape when she bought it, it would be worth LESS today, not more. The only other possibility is that she bought it way under value 2 years ago. If she's serious about selling it, she's going to have to get reasonable. On the other hand, maybe she's just 'playing the lottery', hoping someone comes along that just has to have it. Tell her you'll pay her price if you can get it inspected by a third party, and she agrees to pay for all of the repairs. That should give her a dose of reality. Although it appraises at 129K, that probably doesn't reflect the current condition. A bank would severely down-rate a house in poor condition with code violations such as funky wiring, and so should you.

As an aside- What do you mean by 'river bottom/flood plain'? Have you looked into the history of flooding there? It seems like we have 100 year floods every other week lately. As I've gotten older, I've lost my taste for living in harm's way.

December 25, 2012, 09:34:22 AM

Hey Mr Iowa been wondering of you have settled in some place yet.

A little personal experience that most likely will run in your favor. It happened to us a few months ago.

We sold a piece of property this summer for z dollars. It had to finance, the appraiser came back with his appraisal to the lending institution it was worth $10,000 less than z dollars. Reason was comps or comparable properties. So we had the choice of selling for z dollars minus $10,000 or holding on to it. Point being she might be asking for the moon sure does not mean it is worth the moon nor be able to sell it for that.

Right now with the hit appraisers have taken in the real estate market they are appraising very conservative at least here and from what I have seen across the nation.

In Idaho and I of course know nothing about Iowa nor that county. Assessed value means so little this day and age where they have went nuts over taxing and attempting to over tax. We have laws here now to limit that. Just because the assessed value is X does not make it worth X nor asking value. Anymore than a wrecked 1955 Corvette is worth going against a 1955 that has been in a museum since it was new. Both are 1955 Corvettes however..............

Good Luck

StinkerBell · December 25, 2012, 02:53:38 PM

If you really must have this property, then offer only 100K. Thus splitting the difference. HOWEVER, I still would have any offer pending an inspection, flood certification and maybe take a look to make sure the county has no plans to condem or fine this property for any reason. Also you must have a look at the other buildings, with sufficient notice to whoever she is renting to, most places it is 24-72 hours anything longer then that I would suspect a meth lab. The 100K offer imo would get her interest, seeing 3 digits instead of the two she paid for, there is a psychological aspect to it.

Mr_Iowa · December 25, 2012, 07:40:24 PM

Ive come to the conclusion she just isn't a motivated seller, I'll try some more on this but i don't have high hopes. To answer some questions the house is up on a hill, and i was told it didn't flood in Iowa's 500 year flood in 2008. i saw no evidence of flooding, and think that if it had there would have been a brand new furnace and water heater in the basement. They where newer just not brand new.

As for not being allowed to go into some of the buildings, i think she is going threw a divorce. Her ex must have his things in the cabin, and automotive tools and what not in the steel shed. I'll give her a few days because of Christmas and then ill try to contact her again. i was excited about this property to because it would have made a great owner builder project.

December 25, 2012, 08:09:22 PM

Hey keep an eye on this property. If she has let this go to pot as you say; she most likely will not even start to get her money back in to-days market. If it is a divorce it may go real weird before they have to sell it. Nose around and see what you can find out about it. Tax records, liens on the property can be discovered at the county clerks office. Check and see when was it last surveyed that should be on file at the recorders office. That can tell you something if very recent. There is a reason she spent the money. Might be to satisfy a court judgement.

Mr_Iowa · December 25, 2012, 08:21:41 PM

http://waterloo.craigslist.org/reo/3474859981.html

here is the add, for those who wan to look at it. The pictures really make it look a bit nicer then what it really is.

NM_Shooter · December 25, 2012, 10:50:34 PM

I'd want to take a look in that other shed too. Also find out what the obligations are to the tenant. If she has rented that thing for 20 years and got the cash up front, you'll be saddled with the maintenance of the structure and have to deal with a tenant. Heck, it could be a meth lab for all you know.

rick91351 · December 25, 2012, 11:25:05 PM

Quote from: NM_Shooter on December 25, 2012, 10:50:34 PM
I'd want to take a look in that other shed too. Also find out what the obligations are to the tenant. If she has rented that thing for 20 years and got the cash up front, you'll be saddled with the maintenance of the structure and have to deal with a tenant. Heck, it could be a meth lab for all you know.

Then on the other hand Frank look at the bright side of the meth lab. He might be able get of the action. He could have it paid off real quick. Sort of SPEEDY QUICK and meth is a pretty lucrative business right now you know. Or at least around here it is.......

December 25, 2012, 11:35:49 PM

The meth lab that Shooter brought up is another caution when looking at cheap property, or any property rather. If it has been involved in a bust. That property needs to be cleaned and all residue removed, the structure needs to be tested and given a clean bill of health. That said, here one of the TV stations investigated and there are a lot of properties that were sold before this was done. Nor were the buyers informed that they were buying and living in a toxic house. Buyer beware........

StinkerBell · December 26, 2012, 12:21:00 AM

No one reads my post!

rick91351 · December 26, 2012, 08:11:44 AM

Quote from: StinkerBell on December 26, 2012, 12:21:00 AM
No one reads my post!

Sorry Stink..........

But I have been intimidated by you since you learned to wield and took up archery. As of late for me it has been knitting and vegan gardening......

StinkerBell · December 26, 2012, 10:54:25 AM

You do love me!

firefox · December 26, 2012, 04:28:35 PM

What's not to love Stink!

And, Yes, I did read your post.

Hope you had a great Christmas.

Bruce

December 26, 2012, 04:51:59 PM

Quote from: StinkerBell on December 26, 2012, 10:54:25 AM
You do love me!

I also just did not want to make Glenn and Bruce jealous. It is about time to advise Glenn how many shopping days till Christmas.

StinkerBell · December 26, 2012, 05:25:22 PM

January 25th is highlighted on my calander!

firefox · December 26, 2012, 08:07:17 PM

Smart move!

Bruce

Mr_Iowa · December 26, 2012, 08:58:15 PM

haha what just happened

rick91351 · December 26, 2012, 10:00:35 PM

Blame it on Stink she stole your thread........ I told her don't do it but...........she never listens anymore but then did she ever? .........

So now in the tradition of this forum indeed all forums you must wait with great stealth to steal a thread of hers. Only one that does not apply too is Glenn he sort of welcomes all comers and any subject.

Mr_Iowa · January 20, 2013, 06:56:13 PM

Update: A week or so after i made my verbal offer she texted me asking if i was still interested. She said she would go down to 110K, not to be rude i told her i would split an appraisal with her. I explained how the bank wouldn't approve me for a loan for more then the house was worth. She wont have the money to split the appraisal with me until she get her taxes back (late February). Both her and her BF are currently laid off, i guess money is tight. My guess is the house will appraise at around 95k or less.

I still don't have high hope's with this property, but nothing else has come up. I guess this gives me more time to pay off more debt and save. currently have 6k in the bank, ill get another 2k form taxes.

January 20, 2013, 07:08:26 PM

I also visited the property again and took a look at the cabin

I should have taken pictures, its trashed as well. but........ ITS AWESOME!!!!!! It would get a complete remodel, due to its size i really think this could be done fast and affordable. It has a window AC unit, electric wall heater, 30 gal water heater, claw foot tub.... this is where i plan on living for a few years, until i could save enough money to fix the house up

bayview · January 24, 2013, 09:47:55 AM

I see that you are very excited about the possible purchase of this property. The sellers are relying on it. You have mentioned they are both unemployed and money may be a problem. They purchased the house just 2 years ago for $80000. They have obviously not made any improvements. Property values have not risen much. If this property is "a great deal" it would have sold by now. The sellers may be close to foreclosure and hope to make a profit before the bank repossess.

Unless the property is in a great location, personally , I would low-ball my offer. It sounds as if the buildings are in poor condition. I wouldn't pay much more than property value for this place. Approximately, how much does comparable raw land sell for in that area? Don't get over-excited. There will be another on the market for sale if this one drops through.

I can't imagine purchasing a property and then immediately have to remodel everything. Even after a remodel, you own an old house. Old foundation, old well, old septic, etc . . .

There will be quite a bit of additional expenses after the sale. Remodeling materials, labor, etc. Taking all that in mind, would you be able to resell the property and get what you have into it?

Would you have the opportunity and the ability to purchase raw land and then build what you want, when you want? In the end it would cost about the same and everything is new.

Have you purchased and sold property before? If not, don't allow your inexperience overtake your judgment. I know about the "excitement" When I was younger, I had many times overpaid for something and had buyers remorse. Step back for a little bit and re-evaluate what you really want-need.

Insurance companies have really "tightened up". Would you be able to insure the property in its current condition?

Banks are sitting on quite a few foreclosures. Many of these are not listed with real estate agents. You might find a "great deal" from one of them.

/.

NM_Shooter · January 24, 2013, 10:18:09 AM

Use the dog urine to your advantage in negotiations. Don't buy this property for more than it is worth. If that is soaked into the floorboards, you are going to have a substantially bigger project.

BTW, research how to make an ozone generator to kill that smell once you get the rugs out.

Is this through a realtor or direct owner sale? Sit down with her over a cup of coffee and talk this out. Bring earnest money and a contract when you do. If she bought this for $80k and her dog did $10k worth of damage, figure that in.

Who was it that did the assessment? Did they enter the house and the outbuildings?

I bet that she is behind on some bills, and is trying to make ends meet. Don't get swept up in the emotion of wanting something and paying more than it is worth. If those pictures make it look better than it is, I still wouldn't touch it.

Did you get a look in the outbuildings yet? If not, have you asked why?