Are condos good buys in this economy? 50% 0ff as short sale approved.. is this a good deal? I need some help?
December 24, 2009 by
Filed under condos for sale
question # 1
if i purchase a condo via short sale ” already aproved by bank”, and the price is $100,000 and the assesed price is 200,000 does this means that the equity in the property is $100,000?
2. how long would i have to weit in order to be bable to take out equity.
is there a waiting period?
could you explain how equity works in this case?
great buy and 1 year after purchase you can get a second loan or refi and take cash out
Assessed value has nothing to do with market value and no it does not mean there is a 100K in equity. There may be some equity but not a 100K. The assessed value was based on what the seller paid and not on current market value. Before you think you found gold at the end of the rainbow, have the condo appraised and you will know the true value. It may be a good buy and it may not. Never, never base market value on assessed value
If the appraised value is truly $200K, the bank should have no problem lending you up to 80% of the value, or $160K, when you buy it. You then put $100K toward the purchase of the condo and pocket the $60K to spend on whatever you want.
I would be very dubious about whether that condo is actually worth (appraises for) $200K, though. That $200K might be what it last sold or appraised for a couple of years ago, and the $100K price is right in line with its actual appraised value. If a property’s true appraised value is $200K, the bank isn’t going to approve a short sale for only $100K and take an additional $100K loss. They’re going to put it on the market at fair market value – or even more – to get as much as they can for it. They’ll then wait for someone to pay their price. I’ve seen short sales on the market for over a year, where the bank refused to take less than their asking price. And, as long as the owner is still making payments, they don’t lose any money. So, they don’t care how long it takes to sell.
(1) No. Assessed value and market value often have nothing to do with each other. In the current market place, the sale price ($100k) plus or minus 7% is a much better estimate of market value in the short term (18 months). Which is the long way of saying that the assessed price is more likely to be $100,000 next year than a sale price next year of $200,000.
(2) The boom years (2003-2007) were an oddity. The time honored tradition is 1 year with 20%+ equity. It is unclear how long the current market conditions will last. Although generally an optimist, I think the real estate markets will be a mess for 2-3 more years. I would not count on a second loan let alone positive equity for at least 2 years.
1) No, ignore the $200k amount, it really has nothing to do with the CURRENT MARKET value. You need to look at other RECENT sales or comps for that area to get a true market value of the place.
2) You need to have some equity in the first place, are you putting money down? Or paying in full? Otherwise, you have no equity at all.