Locally and in many markets across the country real estate values are perking up and multiple offers are becoming more common. This situation can make it difficult to find a property that is value priced. It seems that every sharp priced home is bid up. This 'auctionesque' environment can be exciting, but it rarely leads to getting a "deal".
Here in Clark County, Washington the market is healthy but there are still value properties floating around, one simply needs to know where to look. In our local market the properties that are selling quickly in general tend to be priced well for what they are, priced less than 110% of median and move in ready condition. Of course, in any market a well priced listing will generate offers. Locally there are many properties that need some TLC that are sitting in inventory without offers. Some of these represent solid values and with just a little effort can become nice homes. This is where I see an opportunity to pick up a value.
The consumer real estate market seems to be driven by buyers for less than median priced properties and move in ready condition. These homes that are clean, turn key properties are getting bid up out of the 'value' range.
Trying to buy a high demand property in a low inventory environment leads to paying a premium price. Looking at low demand properties leads to finding a deal. If we break up single family residential properties into three broad categories of condition, heavy fixer, light fixer and showroom clean. It is the light fixer that is ideal for a consumer looking for a value opportunity. The heavy fixer is generally not financeable. Those properties are often bought by investors for all cash. The showroom ready homes are in demand and get bid up to the top of the market prices. Light fixers are often financeable; maybe not FHA or VA but certainly conventional loans and can be had for great prices.
When looking for a good deal; looking at low demand properties is usually where buyers will find a great value. Below there are two examples of homes that sold this year. Both are dated 1970s ranch houses and are absolutely solid comparables across the board except condition. Both are dated but one is a clean turn key move in ready with fresh paint and carpet the other a HUD owned as-is property that really only needed carpet and paint and the roof was near the end of its life.
This home was listed for $165,000. It sold a just a few days and was bid up to over $175,000
This home was on the market for several months. It needed TLC but was financed. It was listed at $137,000 sold for $140,000 with a seller credit for closing costs.
These two properties are very similar in age, style and very close together in the same general neighborhood. The difference was the condition, and what a difference that made. The $140k house could likely be brought up to par with the $175k house for less than half the difference in price. That represents a value of $15,000 to $20,000.
The market is being driven by people that want to move right in. Buyers that are willing to take a property that needs some work can find excellent values in bank owned properties or short sales in need of light repair. There are deals to be had for those willing to get their hands a little dirty.