Solid $500,000 profit, poss sl more, SOLID comp, no takers, what gives?

Question

I have a property for sale, price and renovation costs are $1,375,000 and have a nearly identical property 10 doors down with a solid $1,850,000 after renovation sale (they did nearly same thing - I think my architectural plans will yield slightly more, maybe another $50-100K), Sloans lake w/ $3M homes abounding, no takers.

What gives?

Sam Yin · Answer

@Kelly Sennholz

I'm gonna go out on a limb here...

Base on the deal description thus far, it is all very speculative. Factoring in the current market/state of the economy, and the values noted, the realistic timeline, it is a bit tight and many investors may not feel comfortable enough to gamble with that.

An owner/user, who might have ambitions to go through with the plans you put forth, AND have that kind of money, MIGHT be more suitable if they have to courage to take it on.

Just my 0.02

I hope someone gets it under contract and you can move on before rate change or banks get tighter.

Chris Seveney · Answer

@Kelly Sennholz

My question was is the house built right now so I could go walk it and see it. It sounds like you are selling a with a future home on lot which is a lot more difficult to sell because people have a hard time visualizing the home. They also do not want to deal with construction and waiting a year plus.

That is probably why it’s not selling.

If it’s already built then I would ask an agent what’s up.

Stephanie P. · Answer

Assuming your renovation costs are not going to go over is a big deal. You're assuming when all is said and done that you're at 70% loan to value of the ARV in a time of economic uncertainty, particularly in that price point. If you were looking at a home in the 150K range (all in) with comps in the 215K range, I think it would sell in a minute, but there's significant pull back in speculation right now even as rates seem to have flattened out.

Scott E. · Answer

Are you saying that you are trying to sell a spec home before construction has started?

If you're selling the completed house for $1,375,000 but it's just a dirt lot right now, that's going to be a tough sell (as you are experiencing). I've tried to do this out here and have friends who have pulled it off. But unless you have a great builder, great plans, and GREAT renderings, it'll be hard to get a buyer who can visualize the house until right around when drywall goes up.

Hard telling if you're the owner, the developer, or a wholesaler. A bit more context would help.

Kelly Sennholz · Answer

It has one building on it, with minor changes, 3 units. Plans for 3 more units in back. So will receive rents to offset costs during construction and with GOOD comp at 1.85M, again, this may sell for more?

Also, can split the lot and sell both buildings separately.

Sam Spoerl · Answer

@Kelly Sennholz

What are some of the reasons yours should sell for more? Is the location better?

Chris Seveney · Answer

@Kelly Sennholz

Was their home built and yours just plans and not constructed?

Solid $500,000 profit, poss sl more, SOLID comp, no takers, what gives?

Solid $500,000 profit, poss sl more, SOLID comp, no takers, what gives?

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