Forclosure Appraisal – How to do Your Own Forclosure Appraisal to Determine the Market Value of a Forclosure Property | Foreclosures Canada - BC, Alberta, Manitoba Foreclosure Lists Information

<body><p class="MsoNormal" style="margin-bottom: 0.0001pt; line-height: normal"><strong>Forclosure Appraisal<span> </span>- How to do Your Own Forclosure Appraisal to Determine the Market Value of a Forclosure Property</strong></p> There’s a lot of buzz about forclosure auctions, <a href="http://www.canadaforeclosurelist.ca">free government foreclosure listings</a> and buying and selling them for profit.<span> </span>However before submitting an offer on <span> </span>every forclosure – you need a forclosure appraisal.<span> </span>Out of 100 properties that I consider, I would narrow it down to about 10 that are worth looking at in more detail, and then submit offers on maybe 3 of them.<span> </span>The more offers I make, however, my chances of buying one at a substantial discount is greater.<span> </span> So how do I know whether a forclosure is a good deal and worthy of further investigation? Well, you need to determine what price you can potentially sell it for. Here’s what you can do to do your own forclosure appraisal. <p class="MsoNormal" style="margin-bottom: 0.0001pt; line-height: normal">  <strong><span><span>1.<span style="font-family: 'Times New Roman'; font-style: normal; font-variant: normal; font-weight: normal; font-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal"> </span></span></span>Comparable Market Analysis.</strong>  How much are similar properties selling for in the area?<span> </span>You can find out in a couple of ways. <strong><em>a. General market research</em></strong> Drive around the neighbourhood starting with properties within a small radius and take note of all the properties for sale.<span> </span>Call the realtor or the owners (they usually have a lawn sign with their phone number) to find out what price they are asking for and compare what features the property has – bedrooms, square footage, age, bathrooms, etc.<span> </span>Then expand the radius and do the same thing.<span> </span>With this, you know what price sellers are <em>asking</em>, which may or may not being what the property can <em>sell for</em>. <strong><em>b. Through a Real estate agent</em></strong> This way is more accurate than the method described above.<span> </span>See if you can find a realtor who will help you.<span> </span>Realtors have access to an internal database of all properties that have sold through MLS real estate Canada. <span> </span>You can request them to print off a report of all the properties that have sold in your subject property’s area within a certain time period (I would go back 1 year usually).<span> </span>You can even search for only properties with a certain number of bathrooms, square footage, etc that is comparable to your subject property. By seeing what similar properties sold for, you can now have a good idea of the price range of what you can sell your forclosure property for if you bought it for resale. <p class="MsoNormal" style="margin-bottom: 0.0001pt; line-height: normal">  <strong><span><span>2.<span style="font-family: 'Times New Roman'; font-style: normal; font-variant: normal; font-weight: normal; font-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal"> </span></span></span>Cash Flow Analysis and Capitalization Rate (Cap Rate)</strong> This is typically done for investment properties or properties with rental income.<span> </span>The capitalization rate is the yearly rental income divided by the price of the property. So a property with an annual income of $50000 and a price of $500000 means that the cap rate is 10% (50000/500000 = 10%).<span> </span>Each area has a certain cap rate, so if you know how much rental income a property has in one year, you can divide it by the cap rate and you will get the price. <blockquote> <p class="MsoNormal" style="margin-bottom: 0.0001pt; line-height: normal"><em>Eg.</em> Yearly rental income = $30000 Cap rate in the area = 9% Property value = $30000/9% = $333333</blockquote> <p class="MsoNormal" style="margin-bottom: 0.0001pt; line-height: normal">  <strong><span><span>3.<span style="font-family: 'Times New Roman'; font-style: normal; font-variant: normal; font-weight: normal; font-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal"> </span></span></span>Checking the Government Tax Assessment Value</strong>  Every city has a record of how much a property’s value is assessed at for property tax purposes.<span> </span>This price is what the <em>government</em> says that the property is worth. <span> </span>Compare what prices properties are <em>selling</em> for to the government tax assessment value.<span> </span>If they are usually higher than the tax assessment value, find out by how much.<span> </span>Apply the same correlation to your subject property.<span> </span>If properties in the area are selling for about 10% more than their tax assessment values, and if your subject property’s tax assessment value is $500000, than the market value is probably around $550000. <u><strong>Using Your Forclosure Appraisal And Determining What To Offer</strong></u> Now that you have a good idea how much you can sell the property for with your own forclosure appraisal, how do you know how much to offer the seller for the property? Now whether you are buying a forclosure through forclosure auctions and free government foreclosure listings will determine your strategy.<span> </span> In a forclosure auction, you basically have to bid an amount low enough that will give you enough profit but high enough to beat the other bidders.<span> </span>I don’t like forclosure auctions because there is too much competition.<span> </span>I get pre foreclosures from government forclosure listings sites, these properties are not being auctioned and usually have not been listed yet – which is perfect.<span> </span> For these forclosures, you need to do gauge how motivated the seller is to sell.<span> </span>The more desperate they are to sell, than the lower price they are willing to accept. <strong>1.<span style="font-family: 'Times New Roman'; font-style: normal; font-variant: normal; font-weight: normal; font-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal"> </span>Finding Out How Long They Have Been In Default</strong>  <a href="http://www.canadaforeclosurelist.ca">Foreclosure listings</a> sites sometimes has information on how long a property has been in default.<span> </span>If they have been in default 90 days, that means the mortgage lender(s) has just notified the owners that they will be forclosed on if they don’t make payments or pay off the mortgage.<span> </span>The longer they are in default, the more desperate the sellers are because they do not want to lose all the equity in their property to the lenders.  <strong><span><span>2.<span style="font-family: 'Times New Roman'; font-style: normal; font-variant: normal; font-weight: normal; font-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal"> </span></span></span>Finding Out How Much They Bought It For and How Long Ago</strong>  <a href="http://www.canadaforeclosurelist.ca">Foreclosure listings</a> sites sometimes include the original mortgage amount, which gives you a good idea how much the seller’s bought it for and how long ago.<span> </span>If they bought it 20 years ago, then there is probably a ton of equity in the property from the appreciation over the years.<span> </span>In rare occasions, the sellers are willing to sell their property for what they bought it for, which would be a killer deal for you.  <strong><span><span>3.<span style="font-family: 'Times New Roman'; font-style: normal; font-variant: normal; font-weight: normal; font-size: 7pt; line-height: normal; font-size-adjust: none; font-stretch: normal"> </span></span></span>Finding Out How Much They Owe On The Mortgage</strong>  <a href="http://www.canadaforeclosurelist.ca">Foreclosure listings</a> sites sometimes include what they still owe on the mortgage.<span> </span>You can offer to pay off their mortgage, or offer a price between what they owe on the mortgage and the market value.<span> </span>However, this amount is usually the minimum the sellers would accept to sell you the property. So now you know how to do your own forclosure appraisal through comparable market analysis, cap rate, and tax assessment value.<span> </span>You also know how to find forclosures before they are in forclosure auctions from <a href="http://www.canadaforeclosurelist.ca">government foreclosure listings</a>.</body>