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Is That Thing A "fixer Upper" Or A "tear Down"

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Doug Wegener

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https://chrisponsar.com/2013/08/15/is-that-thing-a-fixer-upper-or-a-tear-down/

Interesting blog post from a MAI /SRA.

However, you will notice that in "Poor Condition Property Value" he has subtracted
Cost to repair to average condition.

I don't think I entirely agree with his methodology. For residential properties with substantial repairs the typical purchaser is going to requires a discount above and beyond the estimated cost of repairs (Otherwise why buy it?). I have seen that over and over again in the residential market. I think that should have been factored into the highest and best analysis. What do you think?
 

Terrel L. Shields

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the typical purchaser is going to requires a discount above and beyond the estimated cost of repairs (Otherwise why buy it?). I have seen that over and over again in the residential market.
I hear that but can you prove it either way? Often poor condition goes hand in hand with distressed sale, estate disposal, or REO...factors influencing values anyway. So are you sure the discount can be attributed to a premium on repair risk or not? I saw a lot of REOs where contractors were buying cheap in 2011-2012 but similar REOs now fetch a much higher price...much more than mere market conditions justify.
 

Michigan CG

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I am thinking this is a pretty simple explanation and that adding EI/EP would be confusing to his intended reader. I am guessing EI/EP is included in his "cost".
 

AMF13

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The good thing about examples like this is you can pfa the numbers and it's perfectly OK.
:peace:
 
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