No matter where I am, be it the local Cumberland Farms or Dunkin Donut's I always get the same
question, "Hey Joe, any good deals out there?" Of course one man's treasure is another man's chore , so it's all relative but there are some excellent ways to figure out if the real estate you want to buy is a good deal, a fair deal or maybe not so good.
One system I utilize, assessment ratios, can not only indicate whether a property is a good deal to probable buyer but also help a seller pinpoint a price to market their property. For example in 2011, the 275 single family homes that moved in East Providence, sold for 85.3% of their assessed value. Since the assessment is a constant variable issued by the city, its an excellent way to utilize the sample base of sold properties to develop a projected sale price. Another interesting fact is that these homes were already listed at 90.8% of their assessed value prior to being sold. You can view the 2011 data here. Download Assessment Ratio Study - Single Family Homes - East Providence - 2011
If we look at the 186 homes that are currently on the market they range from a low list price to assessment ratio of 30.34%, which may represent an excellent deal, to a high of 154%. There are 57 properties listed at 85% of there assessment or lower and there are 6 listed at 50% of their assessment or lower.
Some of these properties on the lower end of scale may be distressed in some way and require an additional after purchase investment. Again we can use this formula to gauge the list price to the additional investment needed, to see if it makes sense So for example, if a property has an assessment of $100,000 and it is listed for $40,000, and is bought for that amount, an additional $40,000 could be properly invested in the property for a total of $80,000. That still keeps the investment below the 85% assessment ratio given its current status and may even elevate its value creating more equity.
You can view the current crop of listed properties and their assessment ratios here. Download Esat Providence Listed Homes - Assessment Ratio Study
I'm sure you will find some great buys. Of course there is always a certain amount of horse sense one should utilize when looking at the numbers, so keep that in mind.
(the property shown here is located at 77 Dorr Avenue and is listed for $55,000 by Westcott Realty which is 30.3% of its assessed value. For more information on this property click here.)