By Tamera AragonIn considering the price to pay for a property, the first step you must take is to know the ARV (After Repair Value), of a property. Of course there are other costs to consider in buying and selling but it all starts here…The value of the property. I know I get this question a lot… Question: “How do I value the property I am interested in?” I want to start by sharing that comps, or comparables, are regarded as the single-best tool in determining a home's value. Comps will compare criteria from recently-sold properties in a neighborhood, such as sale price, age of house, size, and square footage and come up with an average value based on these elements. I like to look at the last 90 days SOLDS and use ½ mile radius at most when considering comps around a property I am looking to value. On a side note, for easy online access to the information I am sharing here anytime, go to this website where you will find a ton of other FREE tools and resources catering to real estate investors.
TONS of FREE TOOLS AND RESOURCES HERE: You will need to login to get to this page – but worth the effort! www.realestateinvestorstoolkit.com/So… back to the original question… Answer: COMPS! You need to use comps to come up with value. This is what the banks use to come up with how much they loan. This is what appraisers use. This is the common way to come up with base valuation of property. 2nd Question: So you next question I get is, “Where do I find good comps? Some of you reading this might be a Realtor and have easy access to comps. However, others who are not Realtors, finding good comps is not so easy. And I know I hated to bother my Realtor to have to look up comps when I am making 20+ offers a day. 2nd Answer: So here ya go…here are some free resources that will help you in getting started in valuing a property using some simple online tools. NOTE: Most of these sites include the value of a mortgage when it goes into Foreclosure as a sale, which can make these numbers skewed from facts. Be aware of this. However, these are good starting points and can be used in your initial evaluation. You will definitely want to
- Most popular - www.Zillow.com who owns the term, “ZESTIMATE”. You just type in the address and their value comes up. If you want to learn how they come up with their Zestimate, go here: www.zillow.com/wikipages/What-is-a-Zestimate
- NEW – In Beta Form – www.FindCompsNow.com Seems to utilize Zillow yet lists the properties used to come up with estimate but adds some interesting features like separating out the cash buyers’ purchases from those who were purchased with mortgages.
- Offers Comps plus Property Operating Data Tool – Finest Expert - www.finestexpert.com
- Connected to most MLS Services - www.Realtor.com
- Most Comprehensive – Redfin - www.redfin.com Study showed they had 100% of all homes listed by compared to others.
TONS of FREE TOOLS AND RESOURCES HERE: You will need to login to get to this page – but worth the effort! www.realestateinvestorstoolkit.com/If you have any other ideas, experiences or questions about using and finding comps, please leave me a comment below! It’s great to have the interaction and appreciate hearing from you.