At the Corner Office we are interested in the underlying valuation of property and the relationship of that value to list price and the price a buyer is willing to pay. The underlying value is equal to the comparable sales price paid by buyers and sellers under normal circumstances. But there are lots of situations that cause this normal valuation to deviate greatly from the price paid. Obviously, when a home has structural defects the price a buyer is willing to pay goes down. That’s a fixer. But there are all kinds of financial difficulties that property owners find themselves in the require them to discount their home for quick sale, or to attach some condition to the sale that will cause the price a buyer is willing to pay to go down.
We have two examples here: one is 19238 Jayhawk. It came on the market today, a 1532 square foot 3/2 in a good location in Lake Wildwood list for $189,000. What! That is such a great price, you might assume it is a trashed out home, and it might be, or maybe not. No way to know because the owner is not allowing anyone inside for a week or so. There will be an open house by the end of the month, but by then the home will likely already have multiple offers. Buyers can submit offers sight unseen, and preview the home in week. All offers will be evaluated by a bankruptcy judge during the seller’s bankruptcy proceedings. If the home gets multiple offers, regardless of how low they are, he or she will likely pick the highest one, and that person will be winner of the bidding process. It turns the listing into a court supervised auction.
The second house: 14579 Sun Forest is also unusual. This home was available for preview but it was not polite to shoot video of the interior while the home owner is still living in the home. In this case, the seller is requiring that the buyer grant him a “life estate” which means he will remain as a tenant in the home after the close and will pay a fixed rent, set by a contractual agreement put into the deed so that it cannot be undone until the seller either passes away or is forced to move because of health reasons. A deed restriction of this kind is used when a family member wants to allow one family member to live in the house but the equity to belongs to another family member. I have never seen it “sold” or made part of purchase agreement between buyers and sellers who have no familial relationship. I would not represent a buyer on this sale unless they spoke to an attorney! That being said, the list price of $275,000 is good value, and that’s why I went to see it. A good value, not a great value! The home has a fairly standard kitchen, nicely maintained, good curb appeal, and the fixtures and appliances all look like they are good condition, but this home is only 1200 square feet and it was built in 1981 and it is on a lot that has a bit of an upslope, and is only partially landscaped. Nice, typical, should sell for about $300,000, maybe a little less. $275,000 is no plumb deal.