Looking at the sales history of a property can be very telling. In fact, you can often get clues into the happenings of the real estate market. Here is an interesting sales history for a Sacramento fourplex I came across in the course of a current appraisal I’m working on. This is not at all atypical because the market for residential-income properties really boomed in Sacramento (and then it fell hard too).
7/25/2000 – $110,000 sale
7/16/2002 – $278,000 sale
8/18/2004 – $435,000 sale
2/10/2005 – $459,000 sale
9/08/2008 – $377,500 sale (maybe a short sale – did not list in MLS)
5/01/2009 – $104,250 (transfer to bank – foreclosure)
7/13/2009 – $140,000 sale
What do you see? Does anything stand out to you? Let me know if you have any questions about the local real estate market or your neighborhoood. One of the things I enjoy most about my job is that I get to talk with local home owners and real estate agents about important decisions they are making.
Wow, what a decline. I too recently did some work on a multi-family dwelling (fourplex as well), and found a similar situation. The overall price levels were not as high but there has been a definate decline in values for this type of property. It seems the banks conservative lending guidelines for this time of property has limited the money for investors to borrow, and properties just don’t sell like they use to.
I recently saw this same type of thing on a single family home but it was for Security Deeds and not sales. I was doing an appraisal on an REO property. I had to do a little title work to find out who actually owned the property. In my research I found the property had been purchased and then refinanced 4 times in the next 4 years, each with a much larger loan, until the property went into foreclosure. Not only do the sales histories but the refi and second mortgage histories can give you a clue as to what is happening in the real estate market.
It’s been pretty bad four multi-unit properties, Tom. The decline has been substantial here. Maybe you’ve seen similar percentages, though the levels are different. Many times though too an investor will purchase the property in today’s market and it’s a real fixer. That certainly impacts the sales price too.
Bryan, you are absolutely right. I’m so glad you mentioned that. The refi history really does show quite a bit.