156 Harris Street Home may need to be torn down? Sold in August for $119,000 relisted by the new owner for $147,000. No changes or improvements made.

10/15/17 I originally published this post on Aug. 7, 2017. The home went pending to a cash buyer on August 9th, and the escrow closed before the end of the month at a purchase price of $115,000.

Not surprising, the buyer was not willing or capable, or possibly never intended to rehabilitee this property and instead has relisted the property for sale, at a new list price of $147,000. I want to add one more “advertising wrinkle to my analysis that otherwise remains unchanged and is reposted below. The seller today is advertising the property as “sub-dividable.” This may be true. It is a very large lot by Grass Valley city standards, and it is very reasonable to assume that the city would love to get rid of an eyesore like this home and replace it with new, presumably moderately priced homes. To accommodate the profitability of the developer the City would allow an increase in the density so the developer can build 2 or possibly 3 homes on this one lot, increasing the financial viability of the project, and eliminating a blighted in a neighborhood without causing any adverse impacts because the neighborhood is already fairly high density housing. You would think city planners would agree wholeheartedly with the logic of this… You would think that… In fact, I more or less thought the person who bought the property in August might have done some research on this very topic, and that’ why the bought it in the first place… and of course, that might not have turned out to be true, or at least, not as easy as one might think, and that might be real reason they are selling the property again. Don’t know this for a fact, of course, but I will say this, “buyer be ware” is always a good rule in real estate investing!

Well, that’s one way to make money in real estate! Buy low and sell high, as they say.

8/7/17 Wow! Another real fixer. This one is similar to the home on Mill Street, and the one on Main Street which are all in similar condition. A home like this will need a cash buyer, and of course, a contractor. The home may not be salvageable. Simply put, the cost of demolishing the home and replacing it completely may be less than the cost of renovation. The offered price… of $135,000 seems a bit high. What we are trying to do is determine what investors and contractors think the lot is worth. Let’s say the lot is worth about $100,000…. is the home worth $35,000? That’s about the cost of the permits if you demolish the house and build a new one. If you can salvage the house, and not have to pay all the new mitigation fees, then you save about $35,000. A sophisticated buyer, who can look at the house and determine if the home can be salvaged or needs to be torn down, can play the value of the land against the cost of permits for a new house verses the cost of the renovation permits. While costing out permits verses, rehab costs is something a contactor can do, it is beyond the scope of my ability to advise you on whether this is good buy or not. What I can say, is the this is one of about 4 homes so far this year that have come on the market in Grass Valley that are half way between needing to be torn down, and possibly being, in part, salvageable. To look for what can be salvaged, one would need to go the city and see what sort of records the city has on the home, if there were or are any notices of condemnation, and of course, if there are any building permits or an occupancy permit for the home. Just because someone is living in the home does not mean it is a legal residence. That would need to be verified, and of course, professional inspections would be required to determine if there are code and zoning violations and what the city might require to correct any issues that would be associated with the renovation project. Only after consideration of the cost and the along with a estimate of what the home would be worth after the renovation and replacement could a purchase price be established. These are the kinds of decisions made by investors and contactors.

I go look at these homes. I do so, not with the intention of advising a buyer what needs to be done, but only to see what investors see, and get a sense for what these homes sell for when they sell.

Author: gordon

Nevada County Resident since 1988. Painting and Decorating Contractor 1985-2003 Nevada County Realtor Since 2004 Member of the Nevada County Masters Club (top producing agent) Every Year Since 2004

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