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outlawmp22

Comparable Sales

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I know the basics of comparable sales and the importance of it. I just don't know the best way to get them.

 

I have heard a lot of people say that the best of all is the MLS, but me not being licensed and not really wanting to use an agent to do it for me. Not that I don't think they know how to do their job or anything. But I really would like to do it myself, not only to really learn my area but I think if I am going to make a viable business I need to know every aspect in detail before I let someone else take care of it or outsourcing. More than likely not letting anyone but myself do this in the future since it is such a important part.

 

I am sure there are different opinions and everyone probably does it a different way, but what service do you use to figure your comps? Do you have any suggestions on maybe some of the cheaper ones as of now, and then maybe some more advanced options for the future as the business grows. I know I could do a google search (and I have). I really want to hear from personal experience and what you use on a daily basis. Maybe some of you veterans have used quite a few different ones and have a found a "favorite".

 

Does anyone use the free websites that give an "estimate" or are they a complete waste like most have said?

 

Please any and all comments. Thanks in advance.

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Smitty, you pretty much get what you pay for. So if the site is free, well, you do the math. That said, free is always a good starting point, and the best known of the free sites is Zillow. I never take their Zestimate at face value because it is often inaccurate. Instead, you'll need to dig through the data they provide and find the best 4 or 5 comps for the subject property.

Start by weeding out any property that has sold more than six months ago. Next, find properties that closely match the subject property's amenities: number of bedrooms, bathrooms, square footage, age, etc. Finally, the closer to the subject property geographically, the better. After weeding through all this, you'll find that the 25 or so properties that were on the list have been whittled down to just a few. But those few will give you a more accurate assessment of the subject's value.

You can do the same with any of the many other free sites. If you are having some difficulty and want to spring for a paid service, there are many to choose from. SiteXData and ElectronicAppraiser come to mind. There are others.

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If you can find an investor-friendly real estate agent (maybe a rookie who's anxious to get into the game but doesn't have much else going on?), rather than having them give you a figure, why not see if they'd be willing to send you properties that meet your criteria?

 

Here's how I run comps (I'm an agent so I've got MLS access)

 

  • Sold within the last 6 months
    Within 0.5 miles of subject property
    Same number of bedrooms
    Same number of full baths (make adjustments for half baths)
    Within +/- 200 sq ft living area
    Built +/- 10 years if newer than ~1950, the older houses I just search < 1950
    Same or similar style (ranch, split, colonia, gambrel, etc.)

 

I want to wind up with 3-4 sold/under agreement non-distressed (no REO's, short sales, or fixers!) comps to get my number, so usually I only get down to the year built criteria before I have 3-4, and sometimes I have to broaden my criteria for the tricky ones.

I DON'T go back further than 6 months, more than .5 miles, and unless it's a REALLY rare exception, I don't change the number of bedrooms. Really that only happens with rehab propertys I'm looking at.

 

Also, you might be able to sign up for one of those MLS search tools from a real estate agency websites. Before I got my license, I had found one (MLSPropertyFinder.com I think it was) that actually was REALLY cool, because you could search "solds" and you could set most of the same criteria you can in the real MLS. You might have to sign up for a few different ones before you find a good one, but it could be worth a shot!

 

Another option is to see if the local tax assessors databases are online, and if they are, a few towns around here you can search for recently sold properties. Takes some more work, but I did that for a few houses I made offers on (had to use google maps to find out how far each one was from the subject property so it took forever, but when you're desperate you do what you have to do!)

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I DON'T go back further than 6 months, more than .5 miles, and unless it's a REALLY rare exception, I don't change the number of bedrooms. Really that only happens with rehab propertys I'm looking at.

You should pay close attention to geography too. I lost a nice chunk of change on a deal where the comps matched all those things except the part I didn't notice: the comps were only a block over, but literally on the other side of railroad tracks. The comps were for houses 20-30k more valuable than the house I bought. Had I lived in that area I would have known that. Ouch! On a lease-option deal you might not care, but if you're buying outright look out.

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I DON'T go back further than 6 months, more than .5 miles, and unless it's a REALLY rare exception, I don't change the number of bedrooms. Really that only happens with rehab propertys I'm looking at.

You should pay close attention to geography too. I lost a nice chunk of change on a deal where the comps matched all those things except the part I didn't notice: the comps were only a block over, but literally on the other side of railroad tracks. The comps were for houses 20-30k more valuable than the house I bought. Had I lived in that area I would have known that. Ouch! On a lease-option deal you might not care, but if you're buying outright look out.

 

Yep, important to pay attention to! This comes from knowing your areas though, theres no way to factor that in to any sort of formula. Good point though!

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