What is a "steal" for price per square foot in this market in the north end?

Asked by Cara, Boise, ID Sun Dec 28, 2008

This question is about this property: http://www.trulia.com/property/1069264622-Multi-Family-Home-…

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Phil DeSimone, Agent, Hemet, CA
Mon Dec 29, 2008
short and simple,$55 per sq ft, give or take
1 vote
Brian Brump…, Agent, Boise, ID
Mon Dec 29, 2008

I agree with a lot of what David is saying, not to mention I know him personally and he's a great agent. If you look at if from and investors point of view on residential they are looking to buy at wholesale pricing. Which is about 65 cents on the dollar.

Now going with that approach you're going to have a hard time getting a seller to take that offer. I'd start hunting for distressed properties or pre-foreclosures. The other thing you'll want to do is find the true market value. That means having your agent help you determine what the value of the property is. Getting a huge discount on a property is not all that great if the value is already over inflated.

Last it's going to depend on what type of property you're after. An investment property is different from one you plan to reside in. If it's an investment property you'll want to take a close look at what you can generate in rental income and weight what you need to put down in order to get the property to cash flow.

Those are just a few factors to consider and always ask a lot of questions. You want to make sure understand all the details of the transaction. Make sure a great deal is what it seems.
Web Reference:  http://www.BrianBrumpton.com
1 vote
Rebecca Nier…, Agent, Meridian, ID
Sun Dec 28, 2008
Hello Cara,

This is not a simple question to answer - as the "steal" price per square foot depends on so many factors. Unless you are looking at a lot of similar properties in a subdivision, price per square foot is not a great way to find your "steal", because they are not all apples to apples. It would be like saying that you want to buy a car by the price per pound. Obviously there is a difference in the product of a lexus and a kia.

The better way to approach a value is by percentage of appraised value. Any property that is 85% or less of the current appraised value is a 'steal' (this is also roughly the minimum that banks are accepting with short sales). Of course, whether or not a property is a short sale or not doesn't make it a good deal either. It only implies the situation the seller is in with their mortgage and whether or not they can get out from under it with out the bank's approval.

This home at 409 W Ada Street was built in 1953, but from the photos looks like it has been nicely updated. It has some very unique features, such as, it appears that it has a seperate kitchen on the lower level which gives it benefits that are close to a duplex. It is currently listed both as a duplex and as a single family residence in the MLS. I will have to do some more research to find out if it is technically a duplex or not. Each unit would need its own utilities, adequate parking spaces and of course it would need to be approved through zoning to convert.

My first impression is that this home is priced a little on the high side - it seems like they are counting on the uniqueness of the property features and the location to bring an offer, but I would assume that they are not in a big hurry to sell at their current price point. If it does have duplex zoning, that would help the value also. If you are interested in making an offer on this property let me know - I would be happy to help you get the best deal possible.
1 vote
Dp2, , Virginia
Tue Dec 30, 2008
I like several of the answers you've already received, and I'd like to take a moment to expand a little more on Brian's point--especially as it pertains to investors.

He's absolutely correct that many investors, who know what they're doing, will only purchase properties at wholesale prices. He's also correct that this figure often--but not always--comes around 65% of the ARV (the after repaired value or the market value of a property after it's rehabbed). Sometimes that figure is higher (if less repairs are necessary), and sometimes it's lower--especially if the property was trashed.

The point here is to acquire an investment property using a viable exit strategy--meaning one needs to know what one plans to do with a property before buying it. Also that exit strategy better account for any and all acquisition, rehab, holding, and other costs. If one intends to hold that property for a while, then one needs to ensure that one will receive sufficient income from that property to be able to service its debt (ie pay the mortgage) and cover all of the expenses. Ideally, after having serviced the debt and having paid all of the expenses, one will still have something left over for income (aka positive cash-flow). Otherwise, s/he will end up subsidizing that property from other source(s) of income (which is typically one's take-home pay). Yet, if one intends to flip that property, then one needs to ensure that one will be able to sell that property--after it's rehabbed--for enough to account for the acquisition, rehab, holding, other costs, and one's profit.

So, think about what it is you intend to do, and then you'll be able to determine better what a good price will be for you.
0 votes
Kristin Laur…, , Meridian, ID
Tue Dec 30, 2008
Cara, are you trying to see what a good asking price for this home would be in the current market? I am asking you this as you asked the question with reference to this property, and not just a general question about housing prices in the north end. If this is what you want, my advice to you is to talk to a good agent (they will be able to pull market comps around that area and pull the current appraisal for this home). As others have said in this thread, then you want to see if the home meets your needs and for the price you feel is fair.
0 votes
David O'Dell, Agent, Boise, ID
Mon Dec 29, 2008
Hello Cara,
What is a steal? When I bought my first home it was a small farm (10 acres) with a home and a duplex on it. I paid $105,000 for it. All of my friends told me I was crazy for paying so much. I refurbished the duplex and cleaned up the farm. Five years later I sold the whole thing for $280,000. I thought it was a steal, and suddenly everyone else did also.

There are more factors than price per square foot that come into play. You have to determine whether or not the home truly fits your needs. I'm not saying that price per square foot isn't a good indicator of value. I disagree with agents who try to dismiss it. But your decision should be based on many factors, not just the one.

When I am working with a buyer, I have a full session with them where all we do is try to determine your needs, and evaluate the best properties available to meet those needs. Regardless of where the market is, if we find you that perfect home you are going to have increased values over time.

If you would like to meet and go through the exercise of discovering your needs, please feel free to call or write me.

David O'Dell, GRI
Keller Williams Realty Boise
0 votes
Scott Godzyk, Agent, Manchester, NH
Mon Dec 29, 2008
Cara there is no magic price per sq foot in this market, you litterally need to determine the value of each property in todays market and then the steals are 12% or more off of todays value. It is a little mor ework but you are getting real numbers and values instead of estimates.
Web Reference:  http://www.ScottSellsNH.com
0 votes
Build Idaho, Agent, Eagle, ID
Mon Dec 29, 2008
Here is a link to a trend chart that displays by quarter from 2005 average price of new and exisiting home. Hope this helps,

Trey Langford, Founder
0 votes
Sue Dahlgren, Agent, Boise, ID
Mon Dec 29, 2008
Hi Cara- I'd like to add a bit to Rebecca's answer. In the North (and East) End, price per square foot varies greatly. When we do a market analysis, there are no exact matches to our subject properties like there are in newer subdivisions. There are many things to take into account besides the updates (or lack of updates).

Many homes in the North End have basements. Generally, this square footage is worth less than above grade footage. So, all other things being equal, a 2000 sq. ft. single-level home will be worth more than one with 1/2 the room in the basement. Also, larger homes tend to sell for less per square foot than smaller ones. Older homes with functional obsolescence (little rooms, choppy floor plans, low ceilings, many bedrooms and too few bathrooms) will need to be priced accordingly.

People who live (or want to live) in the North End have favorite areas. Homes on certain streets are priced higher or lower depending on desirability. Homes on the busier streets (8th, 13th, 15th, etc.) tend to sell for less. Homes in certain elementary school districts sell for more.

Generally, homes in the North End sell for between $100 and $200 per sq. ft. You will, however, find them for more and less. The home you are looking at seems to be priced well within this range, but it has no garage. If it is going to be purchased as a duplex, you would want to see the rental history and find out what other expenses are involved.

Web Reference:  http://www.suedahlgren.com/
0 votes
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