NOT the actual house (but you probably knew that already!)
I regularly do Broker Price Opnions (BPOs), which are a kind of mini-appraisal that lenders order often, to get a street level opinion on a property’s value, without ordering a full-blown appraisal. BPO’s can be a source of supplemental income, and they help us agents stay in tune with where property values are in a given area.
The BPO that I completed today was in the 43206 zip code of Columbus, OH, east of Parsons Avenue. Values in this part of the market are are among the hardest hit in our region. One property that we had listed, that couldn’t get sold, and subsequently went to foreclosure had sold in 2006 for over $100,000. Its currently listed as a bank owned property in the high $20,000 range, and still sitting. (That home is actually only 1 block from the home that I was evaluating today). Six months ago, $20,000 was a common value in this area. But not today: values have dropped even lower. When I drove down to take the photo, I thought values would be in the mid- to high- teens. Not so much. Most of what is selling is $5000 – 10,000. Very sad.
But back to the title of my article. In pulling comparable properties that have sold (we call ‘em “comps”), I loaded the sold data into a chart form, which also displayed the cost per square foot of these homes, or “per square foot price”. One sale in this area from May, 2011 struck me. A 2 story home, three bedrooms, 1 bath, 1196 square feet, sold for $3500.00…(Three Thousand Five Hundred Dollars). That calculates to a “per square foot” price of $2.93. About the price of decent carpet, installed. Wow. A house, for the price of most carpeting.
I often tell clients, when we get on the subject of urban investment properties, “Fortunes are being made in this economy for many investors”. An income generating property that can be had for $10,000, that generates $600 per month in income for that investor…that is significant. That investor will have made back all his or her money in 1 year and 5 months. Wow. Not for the faint of heart though, but still: Wow.
