Properties 40-60% under market value?

Question

Recently I have seen alot of ads and people claiming to have properties that are 40%-60% under market value. I would like to know how these people are acquiring these properties and also are they assigning the contract in these properties or how does it work exactly. I am a newbie and I am just trying to gather as much knowledge as I can. This has been one thing i have been very curious about. I am in the Atlanta,Georgia market

Engelo Rumora · Answer

In my opinion the only way to genuinely know if a property is 40-60% under value is if there are recent comparable sales if similar homes showing higher sales price within close proximity of the prospect property.

Thanks

David Krulac · Answer

Zillow and other internet valuation sites use a math formula based on assessed values, recent sales and zip codes.  These type formulas can be way off if the property that you are considering deviates from the norm in the area, like much lower or much higher value than the subject property.

You need to determine what values are without relying solely on Zillow.  If you know values you are ahead of the game and can determine if a deal is really a deal.

I've used last sale price as a point, but that is not today's value.  In one of the areas I work the values are down 60% from 2008, in other areas that I work the decline is 20% or so.  So don't rely on last sales price either but only use the current value.

Michael Seeker · Answer

If you're seeing a lot of these, you might want to do some more research as to what the market value is for these properties and why they're 40-60% lower.  My guess is that they are considering the ARV as the market value and that these homes need extensive repairs to sell for anywhere near that value.  It's unlikely that these guys are going out and buying nice owner occupied homes that need little or no work at a 40-60% discount.  They could also be using zillow values or some weird analysis to come up with the actual value.  Most of the time these guys have never done the work to get something sale/rent ready and are just making educated guesses at a lot of the pieces to the puzzle.  Some are more educated than others, so do your due dilligence.

Properties 40-60% under market value?

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