I am looking at a property and it is a on main street. The area sells in the $400k range and the house is listed for $190k. It would need a lot to get it ready. I am wondering how much it hurts the value and how long it will take to sell the house. My real estate agent says no way to it because of the location. I know real estate is all about location but the house has to have some value...i am just trying to determine what that value is and I am having trouble determining it. Because of the deal I don't want to give the address away. Just looking for general "outlooks" for similar houses. Thanks BP community!
@Mark Breaux the most challenging part about location like a busy road, is you never know how much it will effect the value until you get the property resold. A typical appraisal adjustment could be as little as 5% or over 10% of value. If you don't have a handful of deals under your belt I would take your agents advice on this one. Also good news the agent has your best interest on this one.
Thanks! I appreciate the information. I just couldn't tell if I should jump in with both feet. The road is not super busy but it is a main road through the area. They have quite a bit of commercial down the street and this house is one of the first few that go down. I suppose if it was such a great deal, others would have bought it. They just lowered the price to 179,900 also.
I'm not a fan of busy streets but with that said there are people who will live on one if the house suits their needs. If the area sells for 400k I would price the rehab on a busy street at about 350-360k. So I would shave off 40-50k and if the deal could work at those numbers then I would do it. I definitely wouldn't compare it to a quiet street.
Thanks Ophelia! I'm not a fan either but the deal may be too good to pass up.
my rule of thumb is if the street has a center yellow line on it than I tend to look the other way unless it is an IMPOSSIBLY great deal to pass up.
maybe busy streets dont have lines in your area, but point is that it is very hard to decide how much a major street effects the property. just because an appraiser or the county gives it a 10% reduction in value doesnt mean that you can reduce the price by 10% and assume that it will sell. A huge portion of buyers (possibly all of the ones that could be interested in that property) simply wont live on a busy street, it is a deal breaker for them so you could cut the price by 10% or 50% and they still wont do it. Major factor here is who the house will appeal to, if its a house that likely would appeal more to a family with kids (which most houses are) than the fact that there is a busy street in front of the house will instantly remove it from being an option. also, busy streets only tend to get busier over time therefore property value tends to just continue going down.
there is a recent property flip that I passed on because it was on a busy street. large home with comps in the $350K range, it was for sale by the bank for 150k and another flipper bought it, I was too scared to even offer on it because of the street. they finished the house very nicely and they have it on the market for 250k right now. thats $100k below its comps that are just 1 street over. its been 3 months and the house is still for sale, he probably doesnt want to drop price because he likely has little to no profit left. He will be lucky to sell it for 200k sometime in the next 6 months in my opinion. its a large home, a home that would attract a large family if it wasnt for the busy street out front that would stop the heart of any parent if their kid ran out into it. thats ultimately what your trying to put a price on
Good points. After doing a true estimate. I believe I will pass on it. Ultimately, my worst case scenario was the one you are are talking about. Having the house on the market at $250k and with a hard money loan, owing money! I appreciate the insights!!
It's 3 things Real Estate is about location, location, location.
A busy street eliminates all families with small children. A mother's/father concern is something happening to their child/children.
Then you have others, that may appreciate a busy street. Here's an idea - send out a survey to friends, co-worker, and family to see how many people would not mind living on a busy street. Also ask why or why not.
I prefer not to live on a busy street --- auto insurance is higher, might have difficulty getting in and out, might have difficulty finding a place to park etc.
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