I wouldn't worry about what they paid; they are likely to accept what they think it is worth, and no less, unless they are in a bind for some reason (no indications that they are).

So you might think they should price it by adding some sort of hypothetical "reasonable" profit to whatever they paid, but I assure you they are focussed on what it is worth.

So, approach it like any other transaction. Do you have any other comps? Do you know much about the inside of the 33k comp? Any similar listings?

What have prices done in this zip code since 2008?

By the way, I am fascinated --- where is this????

I understand that price is driven by market, not by what the seller "has in it" (whether a lot or a little); I just would find it useful to know that info, because it can have a bearing on their negotiating range.

There are no other comps in the immediate neighborhood, which is a little island off a main road. It's a mix of small homes and a few trailers, with the one large outlier. Nearby neighborhoods are full of old homes in the $10-40K range. Nearest current listing is a mile away.

Prices have been pretty flat here for the past 5 years.

It's a small town (pop

kinda exciting that flipping real estate is a thing again. After I got hit in 2008 I swore I'd never consider it again. Yet here we are 6 years later and things are picking right back up!

But 2008 was the height of the bubble.. How can it be worth more now than it was then? Seems a bit strange unless that area has exploded in activity lately.

I thought 2006 was the height of the bubble. And there was no bubble here, just a period from 09-12 where sales just dried up, and now they're selling again. This isn't bubble-land.

I talked to the seller. He said they actually bought it a couple months ago, but just recorded the deed last week. I also told him the correct sf and lot size so he can fix his listing.

I offered him 30K. They probably won't go that low given its newness on the market, but we'll see what they come back with as a counter.

Not sure of the stipulations of tax sales in you area but in my area a tax sale is not final until 180 days after the auction. The prior owner has 180 days to reclaim with no questions asked as long as they pay the debt and associated interest and fees. While it might not be the case in your area it is certainly something I would check into.

I think the foreclosure happened before the tax sale (paperwork for May, 2013 recorded). Which actually kind-of confused me. If the bank foreclosed on the owner, wouldn't they keep up on the taxes? And if the foreclosure hadn't happened yet, wouldn't the bank be first in line at the sheriff's auction?

I will make sure that the title search clears this up. Thanks for the tip.

I have followed your adventures off and on over the time with your selling and buying and I do admire what you have done and shared. You do check everything out and sometimes get criticized, and just go on. Glad to see you helping someone, and as usual you will learn more. Have a great day.
Marie

Around here a Tax Sale and a Sheriff's Sale are two different things.
Tax Sales are auctioned off by the County Treasurer, and there is a waiting period and long legal process to foreclose on the house.

Sheriff's Sale's are foreclosures which are being auctioned off by the mortgage holder. Buyers can take possession quickly and it's buyer beware. Around here these hardly ever sell, because they start at the mortgage balance, and many are still underwater.

Weedy, can you go back a little further in your Deed research? If you can find out what the previous owner paid, and what their mortgage was, you might be able know "at least" what they paid for it.

Good luck!

Good point, barb, about Sheriff's sale likely being the foreclosure. That would make more sense, I suppose, than a tax sale.

The last owner bought the house for $37K in 2008 and had a $36K mortgage. The current owners' counteroffer is below that, so the bank must not have set the mortgage balance as the reserve.

We will definitely make sure the title search is thorough. Here's our state law on redemption: "On residential properties, there is a seven (7) month right of redemption from either the time the foreclosure complaint is filed or three (3) months form the time a final judgment of foreclosure is entered. A foreclosure sale cannot occur until these time periods expire."

Well, my guy is officially under contract for $35K. As NC puts it, the house is "in his control." Inspections are scheduled, and he's eager to get it done. He should be in by Christmas!

Update: bad stuff on the inspection, enough to make him walk. Leaking tub and sink plumbing, several inches of standing water in crawl space + mold, rotted subfloor under tub. Chimney needs repointing and proper flashing.

The rest of the bathroom subfloor was replaced, and it looks like fresh lumber from the photos. So methinks the sellers were not truthful on their disclosure when they said "no known problems." They applied a band-aid and hoped their buyer would look no further.

My guy's going to tell them "$25K or I walk."

"several inches of standing water in crawl space + mold"

Ugh, any idea of where the water is coming from?

I am not one who is afraid of mold, but the water in the crawl space would be a big issue.

I don't know the water source, though it could be accumulated from the plumbing leak. Mr. Weedy once did a (horribly dirty) job for someone whose kitchen drain was leaking directly into the crawl space for months. It was a lake under there.

In any case, my guy decided to pass on the house. He decided not to mess with it. He'll wait for the next move-in ready house that's under $30K. :-)