How Do I Know What A Property is Worth?

what-is-it-worth
By Tamera Aragon
In 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.
Again, there are many other factors to consider when looking to buy a property for investment services, (More on this in future blog posts.) Are you interested in real estate investing? Be sure to click on the link below to take advantage of many that I use in my REI biz. 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/
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.
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165 thoughts on “How Do I Know What A Property is Worth?”

  2. I don’t know why I had to re-register just to leave a comment but I did. My comment is more a question but have you ever heard of or used “________. If so, they cost $99 a month, are they any good. It is run by ——-.

  9. Hi Tamera; thank you for the information. Please excuse me for being slow to get to your emails. I had brain surgery in June. I am preparing to return to work on August 15. Things are slow for me right now but I am making progress. I am looking at me emails as much as possible. This site was very good. Thank you.

  11. thanx for sharing all this info, I been reading all I can about real estate investing and just so much info out there from other coaches but you give more info for free thanx.

    Now I really need to get ahead on this real estate Im decided to be a real estate investor though Im a newbie now the decision is , wich coach or program would be best for me.

  15. I have heard that Zillow is much more accurate than they were several years ago.

    HOWEVER!!!!

    I have personal experiences with Zillow that are not favorable. As as example, one property that I was trying to evaluate showed the comps value at close to $450,000 when all the similar properties were sold for about $350,000. (Three comps in the same neighborhood, within the prior 6 months.)

    Except one other property that had a value of $625,000, and had sold approximately 3 months earlier. When I researched it on the County Website, I found that it had been purchased in 2006 for $625,000. It was placed in a Trust in 2007, and a new Trust in 2012, three months prior to the date I was researching.

    The County showed the property as being “sold” every time it was placed in Trust, and the “sales” price was the same as the original purchase price.

    So, the actual “comp” for that particular home should have been the same as the other houses I researched. They were all purchased within a few months of each other in 2006, and were all within about 200 square feet of the subject property, approximately 2,500 square feet.

    Had I accepted the value Zillow placed on the property, my offer would have been much too high.

    DO YOUR OWN RESEARCH. COMPS ONLY TELL PART OF THE STORY!

    Particularly with sites like Zillow.

    Jim Myers

    • AGREED! This article is created for those who are not Real Estate Agents and do not have immediate access to MLS. You would want to use any of these free sites for your preliminary research only. I have given specific instructions for how to use Trulia most effectively only when first evaluating. If you’re offer is accepted based on this research, you most definitely would need to get comps that Realtors have access to to assure you estimated correctly. Thank you Jim!!!

  17. Reply to Tamera:
    (December 1, 2013 at 4:32 pm)

    Tamera:
    Thank you for the quick response.

    FYI, I am not, nor have I ever been a Real Estate Agent, and do not have access to MLS or Comps.

    This was just info that I thought might save someone a lot of grief when putting offers together.

    The County Websites are a source of some info, however, they are notorious for NOT being a site that can be used for Comps. They are a good source of verifying who the present owners are, and the history of the past ownership. This can help the investor who is trying to do as much of the legwork as possible, usually in order to save some money.

    I use the County Websites in order to verify that I am not falling for a case of fraud. No guarantee, but there is at least one case where this one step stopped me from becoming a victim and a statistic. I also know someone who thought they were getting a great deal, and did become the victim of a scam because they failed to take this step. That young investor allowed the experience to stop trying to invest in Real Estate. In my eyes, it was a learning experience. Painful, but not fatal. The shame is that he allowed it to paralyze him. He may never try investing again.

    • Yes. The County records are good for information about ownership, but not for comps and many areas do not have access to this information online. Again – Realtors have access to tax records when often times the regular person does not.

  21. So far I like your information but still have some issues to deal with. In the RE agent class price (value) was whatever was agreed on by both seller and buyer (contract). What the comps say today may not be what they say tomorrow – one contract higher or lower than today’s value affects the values for the next 90 days. Also, not all sales go through the MLS so RE agents (appraisers, loan officers etc) do not have all the data they would need to establish what a property is worth in the market today – a property gets recorded in public record today not in the comps yesterday. Furthermore, Missouri is a non-disclosure state in that the sale price is sometimes but not always reported in the deed so “How much did they pay?” (privileged information!) Maybe a dollar or ten in a lot of deeds I have looked at! Also, did the appraisers look at the properties wholesaled around at various mark-up prices re condition compared to those on the MLS? Unless you walk in the place wholesaled by the one sitting right next to you at the REI guru meeting, you won’t know its condition compared to others already rehabbed. I got burned!

    • All that you say is true. However, keep this mind. When you buy a property to re-sell on the open on market, what is on MLS is what is going to be considered not only by retail buyers, but it is the only information used when a qualified appraisal is done on your home for the retail buyer’s lender. It does not matter as much on the re-sale what is on the back end – what matters is what the appraiser is going to use. And re-selling is where you make your money. This is what you have to pay most attention to. I know this isn’t logical – but as is many things, it is the way sales are handled today.

  31. Hi Tamera ,

    your webinar was very powerful and your system is very thorough and easy to use how cool is that!

    I love it ! and thank you for sharing your info with us and your commitment to excellence !

    Harolyn

  35. Your article was very informative, there were two sites for comps that I had not heard of before. I took them down in my notes to use them in the future. Thanks for the info.

  36. Hi Tamera, I appreciate your thoroughness in both your compiled research and working knowledge how to best come up with a properties comped value. I like a number of the blog questions, I have learned some new info about best practices from just some of your blog responses. Thanks for the links you have supplied throughout the article they are nice to have. I am more equipped to come up with solid comps after reading your article. Thanks Much

  38. Thanks Tamera the information was very helpful it also verify s’ the information that I have received recently. The links were very helpful as I did not have a couple of them until now and the tips on using them was great, thanks.

  40. I tried to follow your instructions on Trulia but I couldn’t find the “view details” tab as described in
    item #3. Can you tell me exactly where this is because I searched all over the site and I didn’t see
    anything pop up that says that. Can you show a screen shot of this or explain it a little better.
    Thanks,
    Steve

  43. Hello Tamera,
    Thank you for your information about getting comps.
    I want to get into the real estate invesing and your website look like
    a good place to start.

    If I find a property that is vacant how would I go about to find the
    owner
    thank you
    tony

    • Hello Anthony,
      Depending on what city the property is located, there are some systems that might provide this information to you online. Otherwise, your County office for sure will have this information. Hope this helps!

  49. I cringe every time a client says “Zillow.” That information is usually not current, IMHO. Perhaps the SOLDS will be less skewed as that is a recorded number rather than one calculated by a computer algorithm.
    I will have to walk through your steps with Trulia. It will be fun to see how a valuation compares with one taken from MLS data.

  50. I don’t know if I belong here Tamera. The language of this article is like learning a new language. I sense your passion to help me and I’ll hang on best as I can.

  62. Hello Tamera, Your experience and sharing of it is a blessing Thank You so much for taking the time. I’ll be in contact with you for some purchase mentoring. Thanks . . Don

  66. Hi,

    Yes, one of the toughest issues in evaluating a property to buy for non realtors. Some of the websites like zillow is just not dependable. Trulia doesn’t work like you say but a little looking around can get you the info.

    Someone needs to develop comps website for non realtors (for a fee of course)

    For what ever reason, the managemybiz website is no longer active. A page opens up offering this domain for sell. Please check it out.

    Thanks
    Keith LP

  82. Tamera,
    I think it’s great what you have accomplished here in all this material you put out. I
    will say thank you so much and know it will come back to you 10 fold.

    to your continued success in life,
    Jay
    Col. 3:17

    • Thank you Jay! It is so kind of you to take the time to share your gratefulness. I am so glad you getting alot out of what I am sharing. Means everything to me!!

  88. Joe W.
    The subject and comp info given by Trulia, and Zillow is good to a point. It should always be backed up with closer and local info in your local area, this is what the agents, brokers, and appraisers will rely on when making deals. Also investors will also rely on investor comps, which may be lower, than what agents may use. Your due diligence is crucial here. Thanks Tamera you are always on point.

  109. This is great information on how to determine the value of a property for beginners such as myself. The investor’s toolkit, as well as the other resources you provided are spot on. Thanks for the info.

  114. You took a practical approach to this subject. I know that this has been one thing I have really sought sources for. For example, I use Zillow a lot and several people have told me to avoid the Zestimate. Now I have s resource to replace that with. Thank you for such practical information!

  125. Hi Tamara,
    I prefer working with a Realtor, because of MLS access. But, it is hard to find one who will work with an investor. They will make appointments that they don’t keep or weasel out of. It seems like they are already connected or they don’t want to deal with you. Any hints on how to find a willing experienced Realtor? Thanks much for your great info.

    • Thank you John,
      I understand that you feel Realtors won’t commit to you and have not followed through. Be sure your going into conversation asking how you can help them. Offer to take them to lunch. Get to know them as people and find a win/win in the relationship.

  129. Hi, Tamera. I was not familiar with FinestExpert.com; very interesting site to determine fix and hold costs, benefits. Personally, I use Redfin more than I do Realtor.com or Zillow/Trulia.

    Quick question: what do you do if you do not have comps available inside the half mile radius, or no sold properties in the vicinity within 90 days? Extend the radius, the time frame, or both?

    • Hi Norma,
      Appraisers will look up to a year and 1 mile radius. If you have to spread out that far, you can do it. However, if there is such low sales in the area, I might question the value of the property you are considering. Good luck to you!

  136. Tamera… SharonZ, here. I am “Newly Acquainted” with you. However, I have a solid history as a real estate investor, albeit, complicated with numerous health challenges, including cancer and having been struck by another vehicle. But, I have chosen “Better over Bitter”! I am Blessed with a Most Wonderful Relationship with Our Awesome GOD… of More Than Enough. HE takes me by the hand and walks me through the valleys… and, on occasions, carries me. HE is Our Good-Good GOD. And, My Biblical-Life-Verse is highlighted in Jer 29:11… HIS Plans are to Prosper Me (with a) Hope and a Future. I have committed the Whole of My Life to HIM, for HIS Service and Glory…no more…no less…through to the End of My Days! One Expression, that has been reveled to me within the past decade is to have my life Impact the Hearts of others… and, instrumental in Changed Lives!… especially in the Hearts and Livesof Single Parent Moms! This is MY HEART’s DESIRE. Loving GOD through Loving OTHERS. Blessings*SharonZ

    • Sharon,
      Thank you for taking time to introduce yourself as well as the obstacles you have overcome. You are definitely living your hearts desire – this is apparent! Praying what I offer will uplift, inspire and train you to take your real estate investing business to the highest heights!

  137. READ UR EMAILS, READ ARTICLE ON HOW TO GET PRICE AND COMPS, ALSO LOOKED OVER TOOLKIT. I WAS IMPRESSED, IT WAS VER WELL CONSTRUCTED AND EASY TO FOLLOW. I’LL HAVE QUESTIONS LATER.
    THX STAN

  143. i believe that this small piece of information is very helpful in one of my fears I think it will make me a lot more bolder at deal making that will be a great start for myself lets do this!!!!

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