Absorption Questions

barbcollinsOctober 24, 2013

We are shopping for our next investment/fixer upper and think we have spotted one we like.

I am a little concerned because it is out in a rural area in Western MD. We would like it because it's only 1.5 miles from the C&O Canal, MD Rail to Trail and the Potomac River. But I want to make sure this would not be an issue when it's time to sell.

I looked at the sales in the zipcode. There were 9 listings (houses only, not land) in the past 6 months, with 4 of them going under contract.

This is good right?

The prices are all over the place. Lowest was $35K (looked like a tear down to me) and the highest listing still active is $799K . If I look at sales for houses in our projected price range ($100 - $105K) there was nothing listed in 2013. There were 3 that sold in 2012 that are just a little higher thab our projected price range.

Is not having any similar houses on the market good or bad?? It would be good for no competition, but does it mean there are not buyers in that price range?

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Do you plan on using a RE agent? They are the ones that could give you a true insight as to what is happening in the area in that price range. Hard to tell from here.
As long as you buy it right, you will be ok. It sounds like a good target price range.
I am very familiar with the Frostburg area, as I commuted from WVU to the DC area at least twice a month for 11 years. Personally, I would never live there. It has a very harsh climate. The area produces its own weather, and it is dreary many days of the year. It is called Frostburg for a good reason! Otherwise it is a beautiful place.

    Bookmark   October 25, 2013 at 6:59AM
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Thanks NC,

Yes we will use an agent (the same one that listed our current investment home successfully). He is on vacation and I don't want to bug him, but yes I will pick his brain too.

We would not be that far west. Yes, I know what you mean about the weather up there. You better like snow if you live there, and I don't. The house is in the Big Pool area which is about 20 miles west of Hagerstown. It's only about a mile from I-70 so it could be a commute to Hagerstown and maybe Frederick.

I guess my question here was more about is it harder to sell in a smaller market than a larger one. The house we just finished (and settle on next week) had around 100 houses in the same price range. That's a lot of competition.

    Bookmark   October 25, 2013 at 8:23AM
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My Grandparents lived in Hagerstown. I was born and raised in Charlestown, WV.
Anyhow, as far as absorption rates go, you should use #s that are comparable to your property and it location. I would not lump the entire market together to determine the absorption rate for your property.
W/O knowing more about the area's marketplace, I would generally think that a $100,000 home with no active competition would be optimal. That is a price range that is selling in most parts of the Country, is affordable by a large pool of buyers and may even qualify for the no down payment financing from the USDA.

    Bookmark   October 25, 2013 at 11:30AM
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