I posted a question about comps about a week ago and the question was primarily to see if the real estate agent I have chosen to help me is the right one or not. When I asked him for comps, he only gave me a couple for each of the houses I'd been considering. He said he could only find one comp for one of them, saying it was the only one he could find that had been fixed up and it was a year old. I don't understand why or how he would have to get one that was rehabbed and didn't send me any other ones for that property.
Here are the next few questions that I asked him and his answers:
1. Where, in our market, are 90% of houses being sold?
2. How many sales are cash buyers?
3. Could I get a list of bank owned homes in the area?
4. Can you send me listings of properties on the market 90+ days?
1. There is no specific area where 90% of the homes being sold.
2. Cash buyers are only a small fraction of all the buyers.
3. I do not have a list specifically for of bank owned homes - it just goes by price.
4. I can't search for homes listed more than 90 days without pulling up each home and physically looking.
I'm just starting out and am not real sure if my questions for him made sense or if his answers would be typical with real estate agents.
I'm just curious to see what experienced investors think, thank you for your time and advice!
@Lilly Kane How seriously are you considering these houses and how many houses did you ask for comps on?
I know exactly what this agent is thinking. I am going to spend hours and hours compiling data and this buyer is never going to buy anything.
What have you done to show this agent you are serious and it is worth it for them to spend time on you? His answers are pretty typical for most agents. Depending on their MLS system they many not be able to easily pull that info without looking at every sale.
@Lilly Kane Every state MLS is different and has different capabilities. As a broker myself, I could not answer 1 or 2 with my MLS. #3 I could send you bank owned homes that are listed, but not all bank owned homes. You would need to go to each bank and if you have a relationship with them you could get a list. #4 would depend on the MLS capabilities. I can search by market time on mine, but he may not be able to.
Also, to your point about comps. He was right giving you only 1 if it was rehabbed and you were looking at a rehabbed property. No agent should give you comps that were not actually comparable to what you are buying
@Lilly Kane Here's the same advice that I give to everyone. If you are going to be serious about buying MLS-listed properties, go ahead and become a Realtor.
That's the funny thing about "comps." The properties have to be ...
I agree with the others. Have you shown him that you are serious? Do you have a pre-approval letter or some sort of proof of funds? I may be jumping ahead of myself a bit, but I know what he is thinking... Here is another new, inexperienced buyer who has been watching too many episodes of HGTV's Rehab shows.
In order to differentiate yourself from other buyers with grand dreams of quick cash, you will have to show that you are serious. And that means proof of funds or lending viability.
Also, a comp is a comp, is a comp. Instead of looking solely for properties that have been rehabbed, include similar properties around each home. They will most likely have different upgrades and differentiating features. Did the home with granite countertops and stainless steel appliances sell for significantly more than the home with slightly less expensive finishes? Where is the value coming from in the market you have chosen? And are these expenses that you are ready and willing to make?
Comps are about a lot more than seemingly projected profit. It is about understanding the marketplace you are in, what is selling for the most and why, and the best way for you to leverage your money for maximum ROI.
My advice to you is:
1. Show proof that you are serious.
2. Ask for comps of sold AND for-sale homes that match the homes you are thinking of purchasing. This will give you a basis for projected list price vs. what price the home will most likely sell at when your rehab is done.
3. Your agent most likely will not be able to search for bank-owned homes. Browse sites like Homepath. Look at low-income housing sites and down-payment assistance sites in your area. Sometimes they have links to government owned properties. I have found a lot of good deals through this method.
4. Sit down and peruse sites like Redfin, Trulia and Zillow. This time looking at the homes available for sale in the markets you are considering. Look at the number of days on the market and previous sales history. Try to figure out why and how some houses are selling faster than others. Is it their finishes? Location? Staging? Research and learn, because as much as you think it is your agent's job, it will be you left holding the bag at the end of the deal.
Finally, I want to congratulate you on stepping out on a limb and taking on real estate as an investment! That is huge. I look forward to hearing more from you in the future! :)
1. I would imagine his answer for 1 was correct.
2. why do you need to know if people are buying with cash or not?
3 & 4 would be pretty easy to answer for me & the MLS I use.
What is your investing strategy that you need this information?
buying homes to fix and flip? Are these really cheap homes your looking for? With very low commissions.
If you have not even targeted an area and are asking very broad questions like this you are going to have a very hard time finding any agent willing to dedicated some time on you because odds are they could spend that time much more effectively working with another type of buyer.
Your best bet would be to follow @Bryan L. advice and get yourself a RE license.
Thank you all for the help and advice. I'll try to answer your questions and clarify a bit...
@Mark Ferguson , @Brianna Schmidt , and @Tiffany Plovie
I probably should have given more information about the relationship before asking my question. Yes, he should absolutely know I'm serious about this; I brought my pre-approval letter to our second meeting, and I've had several conversations with him. He knows I want to fix and flip. So, when some of you guys thought he probably just didn't want to waste his time, does that mean you feel that his answers were just blow-off answers?
There were 12 properties that I asked him for information and possibly to walk through, but he only sent me info for 5 of them. He said he couldn't find 3 of them in the MLS, and the rest had offers accepted. One of the properties he said he couldn't find in the MLS was listed with his company.
All of the properties are in need of repairs and I had originally asked for 10 comps per property for the 5 houses (the only reason I asked for 10 was because one of the lenders I talked to said their valuators would get 10 of their own). He said he'd be lucky to get 2 or 3. He sent 2 comps each for 4 of them, and then 1 for the one I was talking about where he said there was only one sold house that had been fixed up. That comp was a year ago and says "renovated" in the description. The comps for the other properties didn't say anything about being rehabbed or repaired at all. That was my initial question about him saying he could only find one comp for that property that had been fixed up, because the other 4 property's comps were not fixed up.
@Bryan L. and @James Wise -- I've considered getting my license and will eventually, but is too expensive for me to do at the moment. I just need to find out if this real estate agent is the right one for me to work with at this point.
Tiffany -- Thank you so much for your kind word and advice. I'm sure you'll hear more from me asking questions!
Thanks again, everyone!
the only time banks might get ten comps is if they use a desktop valuation. That is a computer program that collects comps and comes up with a value. BPOs have three active and three sold comps. Asking for ten comps on 12 properties is excessive.
Personally I think he did more than 90% of realtors would have with that request.
@Lilly Kane what kind of preapproval do you have....traditional or HML, local or from an Internet co.? If getting your license is too expensive at this point, $1,500 or so, how do you have the finances to fix and flip?
Thank you, @Mark Ferguson , for that information! I also thought it would be too many to ask for, and as I said, the only reason I did was because I thought another valuator would be doing so. After he said he'd be lucky to get 2 or 3, I told him that would be good.
It was 5 properties that we actually walked through, and those 5 for which I asked for comps, by the way.
@Wayne Brooks - I'm not sure what difference it makes in deciding if this real estate agent is the right one for me to work with or if all of the comps should be rehabbed houses or not. My letter is from an internet company and I've got bank statements also from a family member as proof of funds, in case I need him.
If you're looking for comps to determine your ARV, then the comps need to be in a similar condition, so yes renovated comps are the best. The reason for the question about your preapproval.....with a "preapproval/POF" off the Internet, the agent is probably not taking you seriously, as I wouldn't either. They are too easy to get and usually don't mean anything. I certainly don't let my sellers accept one.
Can't get license because it's too expensive.
Pre approval from an Internet company.
Very braud questions, no real defined business plan.
I wouldn't be worrying about finding the "right" agent for you. Any agent willing to spend some time on you is going to be a lucky break for you.
beggars can't be choosers.
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