Sold! (For 1/3 of Tax Assessed Value)
What: 3BR/3BA walkout rambler with almost 2,600 FSF
Where: 2625 Quentin Ave. South, in St. Louis Park’s Fern Hill neighborhood
How much: originally listed for $226,800 on Aug. 5.
When: closed Nov. 18 (Thursday); just posted on MLS this morning.
“Exhibit A” under the category, “don’t go by asking price” would be this Fern Hill rambler.
Originally listed for $226,800 back in August, this foreclosure had a tax assessed value of $387,500. That consisted of $158,700 for the land, and $228,800 for the building.
The bank-owner took two, 5% price cuts, then finally got a deal in late October.
It closed Thursday.
So . . . . drum roll . . . . what did the Buyer pay?
No, that’s not a typo.
Why So Low?
The short explanation is “supply and demand.”
The longer explanation is that the house is a tear-down, due to the worst mold damage I’ve personally ever seen (I showed the house multiple times).
So, you toss out the building value, and focus exclusively on the land.
As I’ve blogged previously about valuing tear-downs, the analysis — based on back testing dozens of Twin Cities deals the last 6-8 years — is to determine the top of the block, add 20% for well-done, new construction, then divide by 3.5.
In this case, the corresponding formula is $400k x 120% = $480k; $480k divided by 3.5 = $137k.
Bingo! (Take off a little extra because of tight credit for new construction, and a soft market for more expensive homes.)
P.S.: and yes, you need to know the “comp’s” — which I do — to know that the top of the block is $400k.