ᐅ Buying a House at a Foreclosure Auction – What Is a Realistic Price?
Created on: 10 Jan 2020 08:07
M
Maddy86
Good morning,
We are considering buying a house built in 1960. The current owner purchased it two years ago through a foreclosure auction. The market value at that time was stated as 75,000, but he won the auction for 100,000. Afterwards, he apparently paid off a mortgage of 45,000 that was still registered on the property.
If he were to sell it now, he would have to receive around 200,000 because of the taxes he would have to pay (due to the mortgage). After six years, this would likely no longer apply.
Is this all correct? Unfortunately, we have no experience with this! Are there other options? The amount of 200,000 would exceed our budget and seems quite high to us.
Best regards, Martin
We are considering buying a house built in 1960. The current owner purchased it two years ago through a foreclosure auction. The market value at that time was stated as 75,000, but he won the auction for 100,000. Afterwards, he apparently paid off a mortgage of 45,000 that was still registered on the property.
If he were to sell it now, he would have to receive around 200,000 because of the taxes he would have to pay (due to the mortgage). After six years, this would likely no longer apply.
Is this all correct? Unfortunately, we have no experience with this! Are there other options? The amount of 200,000 would exceed our budget and seems quite high to us.
Best regards, Martin
I think everything has been said by now.
You have set a personal budget for buying an older property. He expects a higher price because he has invested this and that amount. You don’t care how he arrived at his number; what matters is the fact itself—his asking price.
Now there are two scenarios. He finds someone else willing to pay the asking price, then the two make their deal and that’s it.
Or he doesn’t find a buyer because the property is not actually worth that much on the market. Then your offer might still be successful.
Based on experiences here, building a new house—even on a very affordable plot—will likely cost you significantly more than those 200,000€ (about $220,000). But then you get a brand-new home, designed exactly according to your preferences. However, you have to endure a rather stressful construction phase before you can move in after about 1.5 years.
If you buy the existing house as it is, with a few new wallpapers it will be move-in ready and, based on your statement, reasonably renovated. It costs less, but you have to accept it as it is (layout, features).
Between these two options, only you can make the personal choice. And only you can determine the price at which the benefits of the existing property outweigh the alternatives for you.
You have set a personal budget for buying an older property. He expects a higher price because he has invested this and that amount. You don’t care how he arrived at his number; what matters is the fact itself—his asking price.
Now there are two scenarios. He finds someone else willing to pay the asking price, then the two make their deal and that’s it.
Or he doesn’t find a buyer because the property is not actually worth that much on the market. Then your offer might still be successful.
Based on experiences here, building a new house—even on a very affordable plot—will likely cost you significantly more than those 200,000€ (about $220,000). But then you get a brand-new home, designed exactly according to your preferences. However, you have to endure a rather stressful construction phase before you can move in after about 1.5 years.
If you buy the existing house as it is, with a few new wallpapers it will be move-in ready and, based on your statement, reasonably renovated. It costs less, but you have to accept it as it is (layout, features).
Between these two options, only you can make the personal choice. And only you can determine the price at which the benefits of the existing property outweigh the alternatives for you.
Maddy86 schrieb:
The value calculated by the land registry office for this property is between 110,000 and 130,000 for this region. Then just buy a property like that for 120,000. Can't find one? See...!
What the market demands is 200,000. If someone pays that (doesn’t have to be you), then by definition that’s the market price, no matter what the office says.
One thing is certain: if you don’t pay the 200,000 but someone else does, the office can’t offer you a property for 120,000!
I would be more concerned about why he wants to sell and how to interpret the appraisal being only 120 percent of the market value. Are there any hidden defects? Is there a toxic waste dump planned next door? An airport, highway, lignite mine, power line, wind turbine, or something else?
Scout schrieb:
Then just buy a property like that for 120,000. Can’t get one? See...! Did I say that I want to buy such a property for that price and not pay more?
My initial question was simply about how the taxes are calculated and how that works..
How we will proceed now remains to be seen.
The fact is, we have less hassle and come out cheaper than with a new build.
As Altai wrote, we will weigh for ourselves what we want or are willing to give up.
Scout schrieb:
Then just buy a property like that for 120,000. Can’t get one? See...!
What the market demands is 200,000. If someone is willing to pay that (it doesn’t have to be you), then by definition that is the market price, no matter what the authorities say.
One thing is certain: if you don’t pay the 200,000 but someone else does, the authorities cannot offer you a property for 120,000! Well, what do you know..
kaho674 schrieb:
I would be more concerned about why the seller wants to sell and how to interpret the valuation at only 120 fair market value. Are there hidden defects? Is there a planned hazardous waste site next door? An airport, highway, lignite mine, power line, wind turbine, or something else, who knows?I think the valuation was done the way I already described. For the plot size, combined with the age of the house and the standard land value, there is a calculated value. This is added to the living area value depending on the quality of the property. This is how the authorities perform the calculation. If this results in a certain value for this region, why should it be incorrect? Just because prices are higher where you are? Central location in town, no airport, no highway—where do you think a land value of 24€ per square meter (about $26 per square yard) comes from?Maddy86 schrieb:
If a value x comes up in this region, why should it be wrong? Just because it’s more expensive where you are? No, prices have tripled in recent years. Where I am, they’ve even quadrupled. Of course, this can vary by region. But the reference value from some old file is useless. The decisive factor is the current data for the region, for example from sales platforms. That gives a much clearer idea of the direction things are heading.