REO house that had the kitchen cabinets, counters and appliances removed.

[litch96]

How in the world do I make a condition adjustment finding a similar sale with similar issues is impossible.

 

[Charles West]

Find another beater REO with owner theft issues or vandalism.

 

[George Hatch]

You find it by finding sales to support an adjustment for condition, not by looking for direct comparables for your SC grid. Same as you would if looking for an adjustment factor for excess land area or a tennis court or an indoor pool or some atypical form of construction.

"supplemental analysis for adjustment factor" in this example means looking for a beater and comparing it to the otherwise similar sales from THAT neighborhood and time frame, and then importing the demonstrated difference in price for use with your subject's direct comps which are similar in location, date and other aspects besides just the condition.

"S#A is a sale that closed 10 months ago and is located 5mi to the east in a neighborhood that would not otherwise be considered directly comparable to the subject neighborhood. When compared to the local sales from that time period in that neighborhood the difference in pricing amounted to 30% of it's sale price in that "as is" condition. That property was purchased and them subsequently remodeled and resold in "as remodeled" condition for 45% more than the acquisition price."​

​

Rinse and repeat with several other heavy fixers of flip-bait until you can identify a pattern that you can use with the otherwise similar comparables (albeit in superior condition) in your SC grid. It's not hard to do but it is a little time consuming.

 

[J Grant]

How in the world do I make a condition adjustment finding a similar sale with similar issues is impossible.

How much would a new kitchen cost to put in, considering the appliances, cabinets, and counters were removed? That's one basis for adjustment. Wrt the comps, find depreciated or deferred maintenance houses sold with very dated kitchens that needed replacement - it costs $ to rip out existing dated cabinets, and they have to replace them with new ones anyway.

There is also the rest of the condition of the house to consider of course.

The thing is, beater homes, REO or not, often are sold to property flippers/investors, so look for resales like that as well. What the house sold for as a beater -(then it sells 6 months later renovated-)

 

[litch96]

You could put a kitchen in for around $10,000 of course it would not be fancy but basic. Note it is a small kitchen

 

[J Grant]

You could put a kitchen in for around $10,000 of course it would not be fancy but basic. Note it is a small kitchen

That is a super basic kitchen but if small- maybe.

Most houses to be marketable should have an average level kitchen as the replacement. It needs to be competitive with other houses of its type, and meet the buyer expectations.

 

[George Hatch]

You could put a kitchen in for around $10,000 of course it would not be fancy but basic. Note it is a small kitchen

Nobody works for free. The investor is taking additional risks besides just the cost to cure and they're also going to want to clear a profit upon resale.

As others have commented: look for the flips and compare the before/after. Part of the difference are the hard costs, part is attributable to any changes in the market conditions, and the rest goes to the flipper as a residual of whatever is left over.

 

[J Grant]

Fannie Mae Homepath Properties do a good job of putting the right amount of repairs or replacements in the REOs that they sell in this program. Not many around these days though -

 

[Terrel L. Shields]

or try an extreme 'kitchette' - I thought one of these in a storage shed aka "tiny home" would be the cat's meow.

 

[J Grant]

or try an extreme 'kitchette' - I thought one of these in a storage shed aka "tiny home" would be the cat's meow.
View attachment 91020

You are missing the point - the property has to offer a similar level of kitchen in both size and finish that other similar houses offer - in order to estime a cost to cure as well as an adjustment.