BiggerPockets

It depends where and what the market was doing. In the spring/summer of 2010 where I buy I would subtract 0. As it was a temporary Sellers market. Now I would probably subtract 7-8k. I would start it at full normal ARV and lower the price every 2 weeks.

First ugly neighbors create great price reductions for sellers.

Use it to your advantage.

The important question to ask the seller is if the ugly neighbors were there when they bought. This helps understanding the buyer.

And never use your definition of this type of thing to determine value. It only matters what buyers think.

I've bought many homes I would never live in.

I think it would serve you well to interview 3 recent buyers in the neighborhood to understand their buying mentality then look at 3 homes offered for sale.

If everything is equal there isn't a subtraction. If not then ask the buyers how they would feel about the neighbors in question.

If it's not a homerun deal I'd stay away... A little over a year ago I had two potential buyers not even go inside a flip of mine because they didn't like the neighbors... A third put an offer in and drove by the property one night... They pulled their offer when they saw the neighbors fighting outside... Learn from my mistakes ....plenty of deals right now... Why get stuck??

Thank you everyone for your helpful comments!

@Don - good point about going by the property at night - for whatever reason, that never occured to us, but it's on the list of things to check now.

@Rob and Bryan - I get what you're saying, but deals aren't abundant for us right now. We may have to jump on something less than ideal.

@Michael - one of the things that's difficult for us is exactly what you mention - we hold properties up against the standard of what we would want to live in. We need to stop doing that. I also like your idea about interviewing recent buyers.

@Steve - that is along the lines of what we were thinking. The home has a pool, which normally adds about $20K to our ARV and is big in the plus column, but we were thinking around $10K in subtraction for the bad neighbors.

The neighbors aren't horrible - they just aren't great either. The night scene may be the determining factor.

Thanks again to everyone,

\ Henrik

I like to buy the ugly home on the nice street. If there are other ugly homes on the same street, I often do not buy or I must get a rock solid homer of a deal. Of course, my areas are likely different than yours. From the description, sounds like it is not a middle to upperclass area, therefore buyers there may expect to have a few junkers and clunkers around.

Great feedback on ideas from others, I particularly like getting info on recent buyers and taling to neighbors. Information is a key factor giving you the ability to apply that info to your best interests. If a neighbor agree to have you clean up their yard or paint the fornt of their home, then do it and factor it in. Call the city to report junk cars parked illegally and get them towed away.

Knock on all doors on the street letting them know you work for the A&B neighborhood improvement company and if the homeowner suppies the paint, you will paint the front of the home for free (as an example). Or since you already have a dumpster cleaning up the subject property, offer to clean up and toss their junk too for free! There are many ways to help improve the area.

Make sure you have good room there. From my experience, 10-15k less than what is expected for resale. Good luck.