I'm doing a BPO today, and I just found out it was a family annihilation situation. How much is an appropriate adjustment? $600k price range.
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I'm doing a BPO today, and I just found out it was a family annihilation situation. How much is an appropriate adjustment? $600k price range.
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-10% at least, I have a suicide case before, 10% off FMV is a magic No. investors will jump on this, they don't leave there and they don't care
GA does not require disclosure but if asked you must answer truthfully.
In SF South Bay, two previous owners died in a fire accident. The home was rebuilt and ranout of money, It became a REO sale. The investors could care less about it and it went over 50% over listed price. A month later, after interior completion the flipper made out like a bandit. Point is anything one can NOT quantify one should NOT put an adjustment. In an older neighborhood I doubt if any house did not have someone passed away. Near a local county hospital parking lot construction workers discovered several 100s coffins beneath it. Did it impact the value nearby, across the street condos are selling like hot cakes.
In Ca. any death needs to be disclosed. In the many properties I have sold where there was a natural death on the property there is usually a 10% discount. I would think that an un-natural death would be another 10-20% off depending on the neighborhood, and the inventory level but that is a guess. I had a client buy a house where there was a suicide for no discount because the inventory was so low.
You don't have to disclose in Florida here. Crazy stuff! I would gladly purchase a home for that kind of savings!
I've had a very weird last few months in my neighborhood. About three months ago my neighbors on my left (elderly husband and wife) both shot each other. Then, about a month later, my neighbor on the right (divorced guy who I've literally never SEEN in two years!) died and was left there, along with his dog, for weeks...
Either way, that is a HUGE adjustment to be made on a property value for something that doesn't materially effect the value. In Florida, or FS475 requires that we "must disclose anything that materially effects the value of real property". Murder, Death, Aids/disease, neighborhood stuff is not "material".
New York is strict on these matters. You CANNOT disclose Murders, Aides, etc. even a "Haunted" house. The state will go after your license if you do. I have had 2 situations that murders had taken place and a lawsuit from the buyer on one was "cleared" by the State saying we did right by not disclosing. I would be cautious not to mention anything in the BPO releating to the situation. These banks are going to start pinning some of their loses on your BPO's in the future and you want to be sure you are compliant with state laws. I have never had a "Meth" house but thinking about the impact on the public, I may never want one.
On a side note however, related to stigmatized properties..... Do you know when a properties value could be enhanced and greatly improved over retail due to stigmatization?
Believe it or not, I have seen a properties value greatly increase......like by nearly 60% over neighboring comparables because of the nature of the stigmatization but, it's rare this happens and only in very unusual situations....can you think of some?
Just a little fun.
Hey Steve,
What you're talking about is a Stigmatized Property and yes, I would suspect that the person requesting the BPO would want to know if this was the case and as such, if the act, whatever it may be, has had a negative impact on the value of the home. The whole point of a BPO is to give the person requesting it a complete picture as to any postives and negatives as well as any unsusal marketing issues. I know, that when I do a BPO no a stigmatized property, I always factor in the "price of being stigmatized" and I clearly note that price allowance I made in the comments and clearly identifiy it as to why I did it. For example, I will do all the apple to apple comparisons in square footage, area, size, bedrooms, etc... but, when it comes to my suggested list price, I reflect my allowarnce there and clearly note it.
Thank you, Jesse. That's what I'm looking for. So how much would you discount it on a 500-600k home?
Well, first off, pricing a stigmatized property is more an art than a science. The truth is, I can't really say how much a stigmatized property in your area would go for because, I don't work in your area. In other words, just like with pricing a home, it's all realative to comparable sales for that area in which the property is located. I know that isn't the answer you want but, I am sure you know that what I am saying is true.
You are the local expert, you are the one trusted to give your seller a complete, accurate and honest opinoin of value with ALL factors considered. For this reason and this reason alone, I can't give you a "XYZ" answer. I can give you some reasonable suggestion though.
1. Find other stigmatized property, even if it isn't a perfect match to your subject property. Simply note the BPO stating that the subject property area doesn't have any current stigmatized property and therefore, you had no other option to find other stigmatized property outside of normal search criteria. Specifically note the BPO with what you had to do..ie, expand the search radius, search older sales, etc....
2. When justifing the allowance you make, note it, note it, note it. Explain everything you had to do. The more details here, the less likely you will get a kick back. Take the seller through your reasoning and search methodology.
For example, I remember one I had to do where I had to expand my search radius to 6 miles and had to go back 7 years. I finally found one and I discounted it almost 50% off retail because I could prove another stigmatized property....not necessarily similar in the reason it was stigmatized but, stigmatized none the less sold for nearly 50% off retail. I pleaded my case and it was accepted the first time, no kick backs.
The thing to remember about stigmatized property is that they do not follow the same rules as a non-stigmatized property. Most sellers will understand this and as long as you explain that you had no other option but to expand your search parameters and exactly why you did it, most of the time, it's all good.
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