How to make Comps

Comps, or comparables, are regarded as one of the single-best tools in determining a home’s value. and sadly, that being said, not many investors know how to do it correctly. Its a common mistake for real estate investors to focus on one resource to pull their comps, whether it be a realtor, Zillow, Trulia, it’s important for you to remember these are just references.

For Example:

– over-evaluate – YOU over-pay

– under-evaluate – YOU lose money

You still have to consider:

– condition of your home

– condition of competition

– bought and sold in the last 90-180 days

– type of real estate – lease option, short sale, wholesale, etc

Real Estate Comps For Sale Properties

– Local tax appraisal

– good free reference

– Service Companies

– paid websites

– send you reports

– Court House searches – disclosures – texas = non-disclosure

– Newspaper Listings

– sometimes

– Master the Area – Familiarize yourself with a specific zip code, or mapsco area.

– Call owners of other properties for sale in area

– Realtor/MLS

– properties bought and sold in the past 90-180 days (Zip)

– same criteria

– Property type

– house vs. duplex

– same neighborhood

– adjacent streets can differ in value quite a bit

– $$$/sq. foot

– compared to average of comps

– # of beds and bath – age and style of home

– 1 or 2 stories – condition of home

– lot size – backyard

– amenities

– pool, storage house, etc..

– looking for average values

– mls automatically does this

– drive-by – if a competing property is similar in almost every way, but differs in price, you should check it out in person to see why

– the yard – landscaping

– exterior

– paint and general repair

– traffic and noise

– by a street or not

– garage or covered

Note: Beware of comps pulled by some realtors. Unless you tell them exactly what you are looking for they may pull comps that benefit them more than you.

Calculating Sales Price: After removing all inaccurate comps, take the remaining properties, average their $/sq.ft and multiply that number by the total sq.ft of the property you are interested in. This will be a good starting baseline. You might need to adjust based on your assessments of other ‘for sale’ properties in the area.

Sites: – Zillow.com – not very accurate – Realtor.com – Yahoo Real Estate – Loopnet.com – commercial – RedFin Before any real estate transaction, you must be able to pull accurate real estate comps. This is how you avoid the common mistakes most first-time real estate investors make. Real Estate values change all the time, what may have been 3 month ago may not be the same today. Before making a high dollar investment it’s important that you utilize all the free resources out there. Get your numbers straight, because you really can’t afford too many mistakes.

How-To Find The Value of A House!

Determining property value or how much a house is worth comes down to comparison approach in real estate.As consumers become more real-estate savvy, the general population now knows that Zillow estimates are not accurate. It makes sense that most people want to figure out how to find the value of their home:

Generally speaking homes are valued on a comparison basis In real-estate this is called the comparison approach, which is a very fancy way of say; “You compare all the homes around your home within a mile radius.

Unless you’re valuing an investment property, commercial real-estate, and/or a church, comparison approach will nearly always be used. If you’re valuing an investment property, see “income approach”. Many times people x the square footage of a house by the price per square foot of a recent sold. This can be done, but is not generally accepted by the real-estate community.

• You need find all homes that have sold within your subdivision (or a mile radius) within the past 6 months. This can be done in many way. If you’re a real-estate agent, you use the MLS. If you are a end-used/consumer, you use Zillow, Trulia, realtor.com, and/or ask a real-estate agent to do this for you.

• You need to start weeding properties that aren’t within %15 of your homes square footage. Essentially if a home is not within %15 percent UP or DOWN, of your homes square footage; it’s not a comparable so throw it out!

• Start looking at the amount of bath and bedrooms and weed out homes that don’t have the same bed bath Homes that are not within the same bath/bath, are not considered true comparable weeds those out as well.

• Start looking at the architecture style Comparing a brick ranch to a spanish revival is not accepted. Weed out homes that are not the same style.

• Usually by the time, you’ve done all this you have 2-3 homes left. Which are true comparables, but you can stop there.

• Lastly, judge the condition of the house. Is the overall condition of your home poor, fair, and/or immaculate. A home in poor condition is indicative of rental abuse, such a bad tenants. Dirty carpets, poor colors, and/or an outdated kitchen/bathroom. Immaculate would be an HGTV kitchen, all new fixtures, and/or