Today we are going to talk about a couple of examples where the feasibility analysis saved the day for a couple of our clients.
Example 1 - Two elderly ladies just lost their sister and inherited a nice home in Walnut Creek CA. Nice location, but this home had no updating in more than fifty years. What is it worth?
You are the Realtor and you can pull a CMA to determine the value compared to other homes in the neighborhood. But how about taking into account the sub standard condition of the home? One thing we all have happen is the seller sometimes has an unrealistic idea of the value of their property.
To determine that we need to know what will it cost to bring it up to current livability standards or Minimum Property Standards (MPS). It would not be fair for the buyer to expect more from a seller.
By creating the "feasibility analysis" the seller now is fully aware of the value of the home and they can't be "low-balled" by a slick sales person or buyer into thinking their property is worth less.
Remember it isn't for the seller to update the property for the buyer... but to bring it to the FHA MPS. While a potential buyer might likely want to update the kitchen and bathrooms, if they are functional and in working order with no health or safety issues it is not required to "repair or replace them".
Example 2 - Bank owned property with major structural issues. No offer while on the market for 18 months. We were hired to do a "feasibility analysis".
We were asked to take a look via the feasibility analysis. Please provide us with all the information you already know about the property when asking for this report so it can be as accurate as possible for you.
In this case "a major lender" failed to share relevant information about the listing. In spite of it we came up with our report. The REO manager commented that "The cost of the feasibility analysis was much less expensive than the engineer they had out and found the same issues and cost analysis but had much more information about the other issues and updating needed on the home NOT just the engineering aspects which the engineer had ignored".
What were they thinking? Who knows? In any case they put our report in the home, received their first offer in 18 months just three days later and sold the home because everyone, buyer and seller, now knew just what it would cost to make the necessary and reasonable repairs.