Real estate comparables are the critical components to understanding the actual market value. Get an accurate assessment based on recently sold properties in the surrounding area and the property's condition.
A Comparable Sales Report will compare properties with like features
and relevant information, but rarely do properties match perfectly, even in the same subdivision, so compensations for differences need to be considered.
Finding a property's value isn't an exact science; it is only worth the amount a buyer is willing to pay for it (subjective) and the appraisal amount (objective). However, by understanding the factors that impact the property's value, you'll be in a better position to make informed decisions when it comes to buying, selling, and financing real estate investments.
Investors also use real estate comparables to predict the potential growth of a neighborhood and after repair value (ARV) of the property. The low end of that list is an ugly house; the pretty properties represent the property value after it is repaired (ARV) and looking good.
Knowing the value of property places you in a position of power, and you'll never overpay when buying or leave money on the table when selling. You'll know which distinguishing features are in demand for the neighborhood. And you'll find out the desired extras that add value and which repairs and updates are needed. When creating marketing materials, these are the points to highlight in photographs and listing descriptions.
Always use properties that have SOLD in the last 60 days. Real estate prices consist of several factors, including supply and demand. If your market has recently had a low number of sales, then extend the 90 to 120 days and the radius to 2 miles. If your market or specific neighborhood is hot and has experienced a large number of recent sales, then adjust 90 days down to 60 or 30 days.
Always use the same kind of property, close by, in the same neighborhood, or within a half a mile radius. However, if the property is in a rural area or sales volume is low, it widens the radius and gets a broader perspective.
Always take time to sort through the listing descriptions. It is where you'll find the property's unique features and hidden value. Consider the age, square feet, amount of bedrooms, baths, garage, and completed updates or areas that need repair.
Always include the days on the market (DOM). It clarifies the amount of holding time and costs to factor into the deal analysis. High DOM equals high holding costs.
The location. Neighborhood desirability and attractiveness have a strong correlation with listing prices. Waterfront proximity, views, and quiet cul-de-sacs are better than noisy and busy roads. Consider availability to nearby shopping, restaurants and entertainment, public transportation, schools, hiking trails, and paths.
The community. Try to stay in the same neighborhood or adjoining neighborhoods with the same features like sidewalks, community pools, and crime rates. Consider the amount of rental vs. home ownership saturation rates. Also, the curb appeal of neighboring homes and friendly residents is essential. Use a quick scan on google maps to provide an overview and see the surrounding areas' conditions.
Property style Single-family residential (SFR) ranch style differs from an SFR two-story. And townhouses and condominiums are in a category by themselves. Examine each Duplex, Triplex, and multifamily properties separately. These may be in the same area, same square footage, and have the same features, but they are different property types with very different real estate comparables.
The Price Per Square Foot (SQ. FT.) can vary but only by 200-300 SQ. FT. Divide the sale price by the square footage. For example: A 1,500-square-foot property that sold for $250,000 has a square-foot price of $166.66per square foot ($2500,000 ÷ 1,500 = $166.66). Price per sq. ft. helps show the value of a small property in a big property neighborhood or when the comps in the same neighborhood have many different features that don't exactly match.
Check photos out closely.Look for the same floor plan and overall feel of the property. And the same kind of quality, design, and updates are essential along with appliances, flooring, and fixtures. Upgrades to kitchens, baths, and flooring add the most value
Age of property and condition. Properties built around the same time will have the same wear and tear on the appliances, roofs, HVAC, and plumbing. However, remember to factor in renovations and improvements.
Size and number of rooms matter. Comps need to have an equal number of overall rooms, and the mixture of bedrooms, bathrooms, and garage space needs to be the same. It is also true for lot size and acreage.
Adjust for seasonality. In spring and summer, properties turn over quicker than in the winter.
Compare homeowner association (HOA) fees and condominium and townhouse dues, maintenance, and special assessments.
A Realtor with access to the local Multiple Listing Service (MLS) or appraiser can provide a comparative market analysis (CMA). We love real estate comparables from the MLS, but you need to go through a Realtor for each area, and sometimes that's inconvenient, especially if you need comps for several properties.
Another drawback is the MLS comps do not consist of all sales in the county, they're only made up of the properties that have sold through a Realtor. The MLS system is updated when the listing agent changes the property status to sold and enters the price, and the agent usually has 30 days to update the status.
The drawback to using an appraiser is they cost - $400 to $500 depending on the property's size and how many units.
Online real estate sites like Zillow, Trulia, Redfin, and Realtor.com are useful but limited, and they update slowly. You'll find a basic overview of the property, forecasts, schools, and neighborhood descriptions. Then add the real estate comparables you see to a spreadsheet for easy comparison, which can take some time, especially when you want to change comparables or dig deeper for more details.
County property appraiser office. Access every property and tax appraiser's office across the US. See assessed values, comparable sales, and property taxes. The county also provides updated info, descriptions, square footage, and amenities of the property. Generally, sales appear in the county records 15 days after the closing. Also included are sales that have been quit claimed and sales for nominal amounts. Finally, a government agency is helpful by providing accurate info. But you will still need to use spreadsheets and compile the report yourself and decipher the trends. All this is very time consuming.
So, what' s an investor to do? Do Your Research.
Investors need comps fast. And many times, they're researching comps for numerous properties. You can't bother a Realtor and tie up their day running reports for you. And you can't spend all day visiting numerous online sites to gather info, insert it into a spreadsheet, and analyze it. No, thank you- too much busywork.
Realeflow software generates accurate professional real estate comparables in minutes. Plus, it has 20+ other great features that we believe you'll find helpful.
Investors have the power at their fingertips with software that researches comparable sales, analyzes, and creates an easy to read report for you, including ownership and contact information, title documents, liens, permits, zoning, and interactive maps. With a quick look, you can easily see the value, determine the maximum allowable offer (MAO) instantly, and make investment decisions confidently.
Estimate the residential, multifamily, and commercial real estate value accurately and quickly. In the amount of time it takes to drink a cup of coffee calculate the property value without leaving your desk. With access to online real estate comps investing outside your area is possible.
The equation looks simple, but it can be a complicated calculation, and it's vital to get it right. Too low, and other investors will out bid you. Too high, and your profit margin will be low. Eliminate the fear of big math and mistakes use the Realeflow software.
Specially designed for investors and easy to use - enter some basic information about the property and get the comps.
Not only do you get to see the real estate comparables for the property that you're interested in buying. You'll also see cash buyers, private notes, and regular retail sales for the area. And since it's an online system, you can access it all the time from everywhere.
Operate your investment business more
efficiently, and when it's time to scale up, the software will be able
to keep the pace. Stop wasting time and giving yourself headaches trying
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