[StBernard] A Statement From Mark Madary, Councilman District A

[Westley Annis]

Jer,

I understand what you are saying.  What I was talking about, in response to
Mark Mardary comments, was government buyouts - particularly if the
government (FEMA, EPA) buys out properties just to have them demolished and
not to be built on every again.  That would have an adverse impact to
neighboring properties and neighborhood.

Now, someone selling out to a buyer who intends on rebuilding - that's a
good thing.  Sure, property owners are highly unlikely to get what they
think their property is worth, but as long as they're selling it to someone
who want to rebuild - that's the important thing.  Government buyouts never
do anything to revitalize a community - and that's what Mark Madary first
eluded to in his comments - that we should never agree to government
buyouts.  I'm sure people could fair better in price selling to a private
individual compared to what they would get from the federal government.

Also, on the subject of property values "post" Katrina, I have received many
calls from folks asking me what I think properties are worth right now.
Well, that's a difficult task to put one's finger on it, but let me say
this.  I've been to the website of Sidney Torres where people are listing
their properties for sale and I'm not trying to be rude, but some folks are
just plain pipe dreaming if they think they're going to get anywhere close
to what they are asking.  The best way to look at post Katrina values is by
calculating what it will cost to renovate the house back to its pre-disaster
value - and I can tell you right now that's going to cost a hell of lot more
than it did before Katrina - if you think building materials have gone up a
lot since the storm, just wait and see in the month's ahead when everybody
across SE La starts rebuilding all at once (note, buy stock in Home Depot
and Lowes now).

But let me use an example I saw on that website with a house for sale.  This
particular owner claims his house had a pre-Katrina value of $140K, the
house received typical substantial damage with 8+ feet of water, has not
been gutted out or anything, and he said he'll take $70,000.  Now let's
analyze this property and break it down:

I'll be conservative say the house will cost $75,000 to rebuild - that's
probably low.  But let's go with that, now you're going to pay him $70K to
buy it "as is".  Do the math...do you think you're getting a bargain?  And
let me say this...no one, and I mean absolutely NO ONE is looking for
anything unless they are going to get a bargain.  As one real estate broker
I know put it...if your house would have miraculously survived the storm
without any damage, it would still be worth less today because there is no
real estate market surrounding your property.   And it's going to be a long,
long time before any sort of normal real estate market values return to St.
Bernard parish - period.

If you are trying to figure out what you should sell your destroyed home for
(provided it can be rebuilt), this is the general rule of thumb I would go
by:  first, try to get a good idea of what your home was worth prior to
Katrina - and DON'T over value it.  Next, subtract from that what it would
cost to restore the property back to it's pre-Katrina condition (and try to
be as accurate as possible with those rebuilding cost figures).  After
you've subtracted, multiply the sum times one-third (.3333), maybe up to 50%
if the house was not severly damage (low water).  That's right, only about
one-third because no one is going to buy a destroyed home, put all their
time and labor into, plus thousands of $$$ just to break even on what the
house might have been worth before the storms.  Remember, I said earlier
people are only looking for bargains and those are the only kind of people
who will have any interest in buying your house.

Now, there are always exceptions to every generality and there are always
examples that skew the norm, particular on high end properties.  Keep in
mind two very similar houses on the same street could have very different
current values depending on:  their current condition, if one received more
damage than the other; if one has been gutted out and decontaminated but the
other hasn't; and if the owner of one house is more desparate to sell (at a
lower price) than the other owner.  Many, many factors come into play and
there is no real consistency to the sales I've seen.  If your house needs to
be demolished, then you're lucky to get 15-25% of it pre-Katrina lot (site)
value.  If that seems low to you, keep in mind the buyer's cost of
demolition, removing the slab, plumbing, etc. before someone can even start
to rebuild on the site.

A good friend of mine recently sold his house in Chalmette.  It had a
pre-Katrina value of about $300K and sold it for about $110K.  Also, he
claims his house did not receive as much damage as most others (had low
water), was only a few years old and located in a high-end neighborhood.
Let's apply my suggested formula to see how he made out.  He (not the buyer)
estimated the renovation cost to be around $90,000 - it could easily turn
out to be higher.  Still, take $210K and multiply that times one-third and
you have $70K.  At this point I would be about $40K off.  But, he said his
house faired well in the "damage department".  Due to that, you could have
multiplied it by a factor of 45-50%.  That would give you just over $100 and
closer to what he got for it.

There is no real science here, everthing is subjective and people will pay
for something depending on how badly they want it.  It is not easy to figure
out if you're overpriced or under priced.  Going off of other sales is
helpful, but you need to get ALL the details on the sale and know precisely
the state and condition the house was in at the time of sale.

I hope this is somewhat helpful to some.  I should also note the percentages
and formula I suggested are holding up even in the Lakeview area based on
property sales I know of from a few friends and relatives who recently sold
there destoryed homes there.

John Scurich