Using Real Estate Comps to Your Benefit

Ok guys, I want to show you how to maximize your investment.  Here are some ways to figure out what price you should offer on your properties to get a deal, or to give someone else a deal.

Comps are of course, basically the true value of a house. You can look at the price of houses for sale, but that doesn’t tell you the true value of a house. The true value of a house in an area is based on how much houses are SELLING for based on comps information from REIA Comps, not how much the houses are listed for.

So, if you look in a neighborhood, you may find houses listed at high prices. They don’t sell at those high prices. They may get offers, they also come down before they sell. It’s the selling price of the house you want to go by to make a decision on how much you want to get for your house, or how much you want to offer on your house. It’s also known as ARV (Average Retail Value or After Repair Value). Working with REIA comps lets you figure out what the ARV is easily. 

We realize comps also need to be similar houses of a similar age, in the same location. Now, when I say the same location, you want them to be less than a mile away, the closer the better. You want them to be sold, if possible, less than 60, or even 30 days ago. With this volatile market, you really want to make sure those comps are done on homes sold recently. So, the closer to your subject property and the more recent those homes were sold, the more accurate your comps are going to be.

Now, how do you evaluate? It’s easy if all of the properties are the same where it’s the same model home over and over in the same subdivision. It makes it a lot easier that way. When you get a few of the sale prices, average them out, then you can figure out how much the house is worth. It’s real easy with Condos too because it’s likely the exact same unit, right across or down the hall. The only real difference is in a high rise with multiple floors. The higher up, the better the perceived value. If three identical units sold 7, 9, and 11 months ago, they may not be the best comps for comparison. You have to adjust for the “time” in which the market has changed.

When dealing with different types of houses, you have to go by different things. You have to do more research. You have to look at the size of the houses, the age of the houses. If one house is 50 years old and one house is 5 years old, the value is different. You have to look at the condition of the houses and adjust for those differences. You always have to run comps.  Always do your own research.

Once you have your REIAComps property report and know the prices houses are selling for, use these tips to evaluate them:

• Only use sold property prices, never listed ones.
• Try to use comps as close as possible to the subject, hopefully less than a mile, and closer.
• Comps should be as “fresh” as possible, 30 days old or less.
• Compare “apples to apples”, not new to older homes.
• Use high comps when you’re selling, and lower comps when you’re buying, in negotiations.

It is my sincere hope that this information is helpful.  Along with the use of REIAComps to buy and ultimately price to sell right, you have a formula for a profit.