Yesterday touring potential bargains in the Lake Ridge area of Prince William County turned up a "half price" home.
The property I found sold for $1,375,000 in April 2006. Today it is on the market for $763,900 almost 50% less than the original sales price. The current tax value on the home hovers close to $1,000,000. Does this sound as if it might be a good investment for a savvy buyer? Well it looked good on paper so I had to go check it out in person to see what the deal might be.
Arriving at the home you see a nice contemporary home with a terrific wooded lot. Very private and yet with easy access to a variety of commuting options for anyone who is working in around DC. The home has an architectural shingle roof in good condition and a little gutter cleaning and shrub pruning the home would have nice curb appeal.
So now of course I had to figure out what the catch might be. There is a first floor master bedroom with a large bathroom. The bathroom had black wall paper with a small white flower print. I'm sure that it might have been very stylish at some point in time but not today. However removing wallpaper and replacing carpet have never kept me away from suggesting a home was a good deal.
Still looking for the gotcha I headed up stairs. The home advertised that it had 6 bedrooms, 4 on the upper level. Ah ha! The four bedrooms upstairs were in reality 2 bedrooms as you had to walk through one to get to another. So reduce the bedroom total to 4 and start to add up the redo costs beyond carpet and paint. Off to check out the kitchen. The kitchen had seen its heyday about 10 years ago. It did have granite, a strange brown pattern that I can't remember ever seeing before and appliances that are well past their prime.
Out back there were nice decks overlooking the woods. A fawn with her baby laying in the yard enjoying the great camouflage from the grass, a nice touch of nature. Oh about the pool. Let's just say the Potomac River is a more appealing shade of green than this pool is. Alright the cash register is starting to chime a little louder.
What is hard to imagine is why this home sold for $1,375,000 two years ago. Just a few miles down the road a new luxury home could have been purchased for the same price. Why would either an appraiser or a lender thought that this property was worth that much money? This home is a great example of values gone wild.
When we lament the current market we need to look at homes such as this one and remember the prices for homes 2 years ago had no rhyme or reason. Money was easy to come by and the controls were not in place to keep values in line with the reality of the property.
At 50% off this home might be close to the value that it should have been two years ago. Now it is just another foreclosure that needs a new owner.