If you are looking for a home in central Tampa (Seminole Heights, Riverside Heights, Wellswood, V.M. Ybor, Tampa Heights) the range of prices can be completely bewildering. One house is a 3/2 at 40K another is a 2/1 for 140K. Zillow gives a “Zestimate” 65K. What gives? Welcome to an older neighborhood in Florida.
Statistically a short-sale listing is discounted by about 28% based on state-wide data. If it is a bank owned property (REO) is has an even steeper discount, about 35-40%. Discounted is a key word, if you take your typical short-sale or REO list price and multiply it the percent discounted (example 50Kx1.28= 64K) that is much closer to the market price/value. However, in a neighborhood where 85-90% of the homes are over 50 years of age there is another factor affecting the ability to sell the property…the ability to pass a 4-point inspection for insurance. That is a minor issue in younger neighborhoods in Carrollwood, New Tampa, and Brandon.
A home that is 50 years or older needs to pass an inspection of the roof, electrical, structural, plumbing systems. The pretty bungalow that seems a bargain can’t be financed because it has obsolete knob-and-tube wiring which no one will insure. Your dream house has a roof that is shot so it fails the insurance inspection. Yes a new roof might only cost $5000 but you can’t get financed because you can’t get insured. It is a catch-22. So what happens to these homes?
The 50 year old house that can not pass the insurance inspection takes an even bigger price cut. That home now has to be priced to appeal to a CASH BUYER. That is a discount of 60-80% of what it might sell for if it was insurable to a level satisfactory to mortgage lenders. That is a factor that sites that give automated values can't factor into their models (Zillow is the most well known) because it requires a real ground level understanding of what is influencing values in an area.
This may sound a bit crazy but I have had several examples this year of homes that went to cash buyers for under 45K and resold for 110K or more after being fixed, some with less than 15K in repairs.
When you take out the homes that will not pass the insurance inspection the available inventory is very scarce in central Tampa.
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