465 Days on Market - Good or Nah

7 Replies

There is a duplex for sale in my area.  The asking price is $99,000 but the assessed value is $45,058.  It comes with 2 units that are 2 bedroom and 1 bath.  Let me just add, it is about 2 streets away from a housing project. 

Nonetheless, using the rental property calculator, it seems to have a pretty good cash flow. Of course, I would need to take a step further and look at the actual financials from the seller.  

My question is, if something is on the Market that long(465 days), could that indicate it is a terrible purchase?

Make an offer and ask for a longer due diligence period and really go over it. I looked at a super cheap short sale condo today that had bad water damage from a leak in the unit above and it smelled like cat pee and poop. I smelled opportunity :-) There was actual feces in the unit...and mold from the water leak/damage.

Yours could be a stubborn seller or bad property condition or both. If they won't budge on price, let them keep it!

Assessed value has little to do with actual market value. You should analyze its actual income and expenses and make an offer based on that analysis.

If the seller rejects the offer then move on to the next deal. Time on market is usually an indicator the property has warts or an unreasonable seller looking at the asset through rose colored glasses. Nothing you do will change a fools opinions short of being made a fool.

Isn't "assessed value" often LESS than "market value" ie. the realistic market value may well be BELOW $45k? In which case, the savvy investor would put in Offers of ~$30k? In which case, the Seller will just reject the Offer out-of-hand? In which case, this property will still be on the market in another 465 days?

If you find out the actual financials, please share here. Cheers...

Lower assessed value helps you because it lowers the amount of taxes you pay. Usually not a real indication of value. Also, the market has improved over the last year or so. Therefore, what was overpriced then may almost be a bargain now depending on how outrageous the realtor was to begin with. If recommend looking at where properties traded at 2 years ago, 1 year ago and In the last few months to understand the trend in that sub market. The period of time also probably has worked on the seller as a reality check if you will. They know that they are high so it may have created an opportunity for you. Finally the housing projects 2 blocks away may not be such a big deal unless you find that it has had a direct negative impact on your property or properties on your block like breaking etcetera. Also you don't seem excited about this deal. That's most important in my opinion. I'd recommend finding a deal that you're excited about the prospect of owning

How long it has been on the market is just a plus for you.

The condition of the duplex is a very important issue for you  You would have to assess the cost of the renovation and add that cost to the price of the house an then see what the cash flow looks like.  If it is going to cost you, $41,000 to renovate the property then you are paying $140,000 for the property.   You will also have holding costs while you renovate of approx 3 or 4 months so that has to be added to the cost.

So run the renovation costs and the rents here on BP and see if it makes sense .

Originally posted by @Brent Coombs :

Isn't "assessed value" often LESS than "market value" ie. the realistic market value may well be BELOW $45k? In which case, the savvy investor would put in Offers of ~$30k? In which case, the Seller will just reject the Offer out-of-hand? In which case, this property will still be on the market in another 465 days?

If you find out the actual financials, please share here. Cheers...

If I'm not mistaken county tax assessed value can be less than, near to or even slightly more than FMV. It all depends on where the property is. More commonly assessed value is less than FMV. In some states and areas, much less.

You should be dealing with FMV and taking condition factors into consideration, not assessed value.

Mind you I speak from an academic point of view more so than from actual hands on experience.

I am learning, have learned much but have so much more to learn.