I think you are correct on your assumption that the value of the property would be close to the 222k you are paying. If this is an arm's length transaction, then, by definition, the market value would the price you pay for it. Can you justify a 53% increase in value in one day (without making improvements to the property)?
Based on the information you provided, the price difference between the comparables and your property appear to be due to condition. You may have a better case if you improve the condition of your property to the same (or better) level of the comparables.
This is just my two cents. Let's see what the BP experts have to say.
Thanks for the reply! Honestly I think my place is of equal value cosmetically or else I wouldn’t even been considering this.
I have no problems rehabbing but I am wondering if there is a way to sway them In your favour.
I recently had a duplex appraised at 325k, he said he would have appraised higher (I asked for 350-375) but there weren’t comparables in that side of town (quite far from this building).
If the property is of equal/similar condition to the comparables, AND, this is an arm's length transaction, THEN, how did you ended up getting such a large discount? Is there any adverse condition? Was the seller "motivated"? Any functional obsolescence? (I don't really need to know) I think there must be some justification for the price difference between the comparables and the subject property. Otherwise, it sounds to me like 222k is the market value of the property.
Am I making any sense?
Still waiting for the BP experts to chime in.
Yes sounds good I am hoping others chime in as well.
If I ordered an appraisals after the purchase, do they/can they use the subject property as a comp?
It makes sense during the sale the appraisal comes in at what the market is willing to pay for it.
Your sales price will essentially be the appraised value. If it were worth more in its current condition, then it would have sold for more. You will have to wait til your own property ages outside of the conparable sale window to end up with a substanially different appraised value, because until then your property is the comparable sale most in likeness to your property.
Okay thank you. What is the time window for that to pass by?
In the meantime I will proceed with the repairs but I just figured it was possible to purchase and immediately have equity based on comps.
Usually the appraisal @ sale comes in at exactly the value you paid but this time it came in 2,000 above. Does this lead you to believe that the appraiser also thinks it’s priced under market?
I’m not trying to skimp on repairs and the first R in the BRRRR process but if it’s just a matter of me calling 5 banks and ordering appraisals (5*$500=2,500) - that is allot cheaper and will take less time then doing repairs.
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