10930 Bettcher Court, dropped the price from $300,000 to $289,000 and it went pending, compare that home to this new listing at 170 W. Olympia for $270,000

A month ago I published the following blog post featuring 10930 Bettcher Court, and what I said then still holds true.
9/13/17 There have been over a dozen two bedroom and one bathroom Grass Valley bungalow style homes on city lots that have been listed and sold this year. I have previewed all of them, and taken notes about the condition, features, neighborhood and curb appeal. There have been a few fixers that have sold for as low as $150,000 and a wide range of modestly appointed homes from $240,000 to $280,000. In the range between $280,000 and $300,000 there have been some real doll houses, fixed up, high-end finishes, fully landscaped, rehabilitated and move in ready. Even if they have a garage, (and many don’t) the highest price paid for a bungalow this summer has been just under $300,000. But sellers have no shame when it comes to the list price. This seller has a home that compares favorably with the homes that sold for $265,000 to $280,000 all summer long. It is not one of the rarified total upgrade homes, that actually would capture the $300,000 price tag. It’s a nice home, but not $300,000 nice. It’s not a fixer, and surely it is not a $250,000 home, but buyers have laid down some markers this summer what they will and will not pay for a Grass Valley bungalow, and this home falls short of that standard.
So, what will happen here?
Well, obviously, either the seller will adjust their price to meet previously established buyer expectations, or a buyer will fall in love with this home in this fall market where inventory is declining and there are no other suitable homes for the $275,000 that comparable sales data says this home ought to be worth, and thus they pay the premium the seller is asking. Or, the home sits, unsold till the listing runs out, and no transaction takes place. I don’t have a crystal ball, and I don’t know how motivated the seller is, so predicting the outcome is not possible. What is important is that however it turns out, the sale at list, or at a reduced price, or no sale at all, tells us about the strength of the fall market and sets the table for what will happen over the winter season. As the season turns, and fewer and fewer homes are listed, the significance of any one sale takes on greater importance. It would be a big win for sellers who own similar homes if this one sold at or close to $300,000. If the seller caves to market pressure and lowers their price, it will serve as further confirmation to other sellers and their agents that $300,000 is a bridge too far for most Grass Valley bungalows.
10/18/17 Right after I posted this blog, the seller lowered their price to $289,000 and now the home is a pending sale. What about this new listing at 170 West Olympia for $270,000. The specifications of the homes are almost exactly the same, but the details of the condition are different. West Olympia is not as well maintained, need more work, has some differed maintenance.

14555 Rough and Ready Hwy. Main home 3/1 plus a cabin studio on 1 acre, listed for $299,900

This property was originally listed on 8/17/17 for $345,000. Recently the seller dropped to the price to just under $300,000 so the Corner Office went out to have a look. It is a little hard to get good comparable sales data on homes that just don’t fit neatly into any one category. It is not exactly a fixer, but the home is dated and has some differed maintenance. The home was built in 1956, and has the typical 3 bedroom and one bathroom floor plan that was the predecessor of the modern ranch style home that was popularized in the 1960’s and is still being built today. The cabin is not a permitted structure, and may have just been an old barn or some other out building that was converted into a one bedroom and one bathroom backyard rental. The zoning is not multifamily, but the property is also backed right up to a trailer park, which has a very high density zoning. I doubt anyone cares about the shack out back. The neighborhood is not the greatest. Homes range from $250,000 to $500,000, which is some of the least expensive housing in the county, and that’s with good reason. There is lots of road noise, and several properties in the immediate neighborhood have trash and personal property stacked in the front yard.

3 acres with a single wide, 10538 Carriage listed for $299,000 and vacant land a few doors down, 10224 Carriage, listed for $115,000

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OK, so here is a true test of the value of the development. Here are two properties, identical in neighborhood and topography, but one has a single wide trailer, a well, power, septic, driveway, and PGE power. The difference between them is entirely in the primitive developments.

The land listing at 10224 Carriage has bene on the market for $115,000 for 150 days. That tells me that the property is worth under that asking price. I suspect the property with no development is worth something less than $100,000, but the market place will make that determination. What I am more interested in is asking a simple question: if the land is worth $100,000, then how much is the well, septic, singlewide, power drop, and driveway worth? My estimation is the all the development combined in worth under $100,000. My professional opinion is the property with the trailer is worth less than $200,000, no where near the $300,000 the seller is asking.

All that being said, I like this neighborhood. Homes are in the $300,000 to $600,000, and lots are all 3 to 5 acres, there is a stream that runs through one end of the neighborhood and you cross an old one car bridge to get to the property. The road is gravel, but since you can only exit and enter the neighborhood on one side, there is no through traffic. The property is close to the highway, but there is a small ridge between the neighborhood and the freeway, so there is no freeway noise.

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.

15101 Woodland Loop Best Value in 90 days in Wildwood listed for just $269,000

This home packs a punch. Curb appeal and yard are very plain, but the siding, roof and deck all look well maintained. Inside the home is clean, has good paint and carpets, and a few upgrades too. Granite counters in the kitchen and guest bathroom, upgraded fixtures, nice appliances, and bamboo floor in the master bathroom. Plus there is nice size walk-in closet in the master. This one will not last long.

13761 Sun Forest HUD home in need of full renovation listed for $185,000, went pending in just three days

It is anybody’s guess how a home gets to be in the condition of a home like this one. There is no apparent reason that a homeowner removed floor covering and sheetrock throughout the home.

It does not matter how the home ended up in the condition it is in, or what caused the owner to lose the home in foreclosure. The home is owned by HUD, and is being sold with HUD requirement than any buyer must occupy the home. That means the buyer must pay cash or get a 203K rehabilitation loan. I think the condition of this home would allow for a rehabilitation loan, but it is more likely that buyer is a cash buyer that happens to have enough money to purchase the home, but probably not enough money to buy a better home. Inheritances, insurance settlements, other kinds of one-time financial windfalls that create a lump sum of cash for person looking to buy, but not enough money to buy a home like this if it were all fixed up- This home would certainly be a high $200,000 or low $300,000 if it were move in ready, so there is quite a bit of sweat equity for a buyer who can tape and texture, paint and put in floor coverings. What a buyer who is not a contractor or investor does not know, is are there any hidden problems or expenses that will associated with the rehabilitation of this home? This one is going to be a risky purchase, but it went pending after just a few days on the market, so somebody is willing to take that risk.

10497 Sierra Drive, 3 bedroom 1 bathroom home for $300,000. Nothing special? Why did it go pending so quickly?

The market never lies. This one is typical of the older homes in Grass Valley. Three bedrooms, but just one bathroom. No master suite, just a hallway with cluster bedrooms and one central bathroom to service the household. The kitchen is dated, the cabinets are at least 30 years old. The yard is flat, but it has not been maintained all summer and everything is dry or dead. About the only really good thing about this house is the carriage house, 2 car, two story building on the back of the lot. It has a small two car garage downstairs, that might be OK to park two cars, but really is better used as a shop. Upstairs, the space has been converted into an “almost” studio. There is a bedroom, a rudimentary bathroom, evidence that there might have been a kitchen. Of course, there are no permits for using this space for residence. You could convert it into a separate apartment, but you would never be issued a permit for such a use. But somebody saw the value here, and it went pending after just a few weeks on the market at $300,000. I am guessing somebody will finish out that carriage house and rent it out and that’s why this home sold so quickly, and at a hire price than several similar homes we have looked at over the course of the summer.

Two homes on acreage: 10640 Del Bonita listed for $325,000 and 12367 Cannon Listed for $295,000

Today the Corner Office dialed in on homes with much more acreage than we usually see in near $300,000, and below market. I will take you out to see two homes, each on near five acres.

We will be taking a look at the land, view, and out buildings to see if there are any features might make either one of these homes a real bargain. The land is not all that spectacular on either home. The properties do have near end of the road privacy, but neighbors on near by streets are closer than neighbors on the same street. You can see the near by homes, but you probably would never meet the neighbors because they access their property from a different street. The Del Bonita property is heavy brush and steep down sloping. It has great views, but the home is less than a 1/2 mile from hwy 20, so while you can’t see the road, you can hear the dull roar of distant cars. There is a lot of personal property scattered around the home, and inside the home looks like it is in the middle of a painting project that is not quite finished. The Cannon Way property is rolling oak studded forest with rock out crops.
Both homes need work. The Del Bonita is more of a cosmetic fixer, the Cannon Way home needs a complete rehabilitation. Have a look and call me with your questions.