As I browse Zillow for properties in Baltimore, MD, I see many houses with multiple bedrooms, selling for under $150,000 with mortgages of less than $700 a month. I am familiar with the areas and know that they're not bad at all, and the photos show clean, nicely renovated places (new appliances, granite countertops, etc. - the typical good-looking family home). Yet, many of them say they've been listed for more than 100 days.
Why? Are there certain things wrong with these places that don't appear at first glance? Why wouldn't they have been bought? What's the catch, or what are possible catches in this situation? What other numbers and data should I be looking at?
@Jared G. a $150K house in a $130K neighborhood is not a bargain. I have sold a house in Baltimore with granite countertops for $60K. It would have been on the market for a lot more than 100 days if i was asking $150K.
This kind of relates to your question in another thread. Part of what makes a good deal is buying below the market price. What makes a bad deal is paying above market price. Part of what makes a good investor is seeing value where others do not.
@Ned Carey Thank you, Ned. I guess my natural follow-up is how you know what the market price is. Anytime I search I seem to get a whole range of different sizes, prices, and conditions of home even in small areas. How do you know what makes a good or bad deal?
@Jared G. you can build a spreadsheet with different columns for # of bedrooms, 3 bathrooms, Sq Ft, garage Y/N, finished basement Y/N etc. When you do that you will start to see a pattern of why some are more expensive and some are less expense.
If comps vary due to condition rank the condition of the ones that are livable. is it very dated, needs fresh paint and carpets or is it fully renovated. Add that as another column to your chart.
Do NOT include properties that need renovation. You don't value a property by saying this property needs renovation let me see what other properties needing renovation sold for. The cost to renovate can vary wildly and so do the prices of fixer uppers.
This all comes down to what I stress in other posts, You need to know your market. You don't do that siting in front of a computer screen. You do it by going out into the market place and looking at lots of deals of all kinds.