what to do???

Question

MY husband and I have found several properties..

We need some buyers so we called several WE BUY HOMES ads and we are getting so many different opinons... one investor asked us if we were new to this and we said yes.... and he started drilling us.. (somewhat normal) Anyways he told us that the appraised value of the home does not matter, it is the comps.

My question is when looking at comps especially in a old (historic) neighborhood with newer homes and older homes that have not had really any renovations.....how do you know what to look for??

Here is what I found on this property.

the house was built in 1930 (completely renovated)
The seller has agreed to 190,000 as purchase price
no repairs are needed 
the house appraised about a year ago at 245,000
according to the comps there was a house that was built in 1945 and I'm assuming it has been renovated ... it sold for 395,000 in Jan. 2007
Other comps were showing price ranges from 70,000 to 450,000
THe neigborhood is a pretty nice place.

Any advice would be great.  :blush:

N/A N/A · Answer

I’m a national review appraiser and am familiar with the Atlanta market. In some zip codes there are over 700 homes for sale at this time. That is way too many. There are tons of foreclosures and banks are wary of mortgage fraud in that area. Your appraisal for 245,000 means nothing at this time. Prices are falling dramatically as is evidenced by your sellers willingness to sell $55,000 below that appraised value.

Also go to Realtor.com and see what the active listings are in your zip code. Those homes will be your competition. Don’t buy this property yet!!!!!!!!! :protest:

N/A N/A · Answer

I agree completely. Here is GA you can have 200k houses right down the street from 500k houses and to me thats a huge difference! If you just ran comps without knowing the neighborhood you would think you had some great deals!

I also understand the grilling. I was looking at a wholesales website yesterday and their repair estimtes to me were way off based on what I saw in the pics. I could be wrong as I am new to this, but it makes me wonder what effort did they really make to give honest estimates rather then numbers that look great. What made me doubt it even more is they did not list the repairs needed. For me give me a list and some numbers. From there I can guess if your close and if its even something to look further into. 
The point is if your numbers are good numbers, be able to back them up and the right investor will know.

Account Closed · Answer

Jessica,

The answer to your dilemma is in understanding the meaning of the word "comp" which is short for comparable.

The only comps that have true meaning when determining value are those that are truly comparable to the subject property. In other words, same bedroom count, same construction quality and style, same size, and, most importantly, same neighborhood.

It doesn't have to be an identical house, but it needs to be reasonably close, and it needs to have sold recently enough to matter. How recently depends on how fast the neighborhood is appreciating or depreciating. In some fast moving areas of Florida or California, comps more than a month  old are too old. Thankfully, most of us don't have to deal with that. In my area of upstate NY, a couple of years is reasonable enough, and I can factor in the rate of appreciation to arrive at my offer.

Same neighborhood can vary by location as well. In some suburban areas, a neighborhood can extend for many blocks, and values will remain pretty much constant throughout. In other areas, value and neighborhood character can change substantially from one street to the next, sometimes within a hundred feet. There is NO substitute for knowing the market and neighborhood you are working in.

For confidence' sake, you'll want to have as many comps as you can, at least two or three, preferably more. In some cases that's not possible, and you'll need to fall back on your knowledge of the area and the neighborhood, or bring in an expert, such as an experienced Realtor who you know and trust, or an appraiser.

To sum up, when using comps to determine value (and they ARE the most reliable way) make sure your comps are truly comparable.