How do you choose your "subject" property for comps when just starting out?

Question

Hi everyone!

I'm just starting out in REI and can't seem to figure out how to properly do a comp in my area (Antioch, CA). How did some of you choose your "subject" property when first starting out? Did you just choose any listing and make it your subject property?

Since I'm fairly new, I don't know what a good price or good deal is in my area. How do you learn this when starting out? I feel like this is the only thing holding me back from getting started.

I've been reading the book on flipping houses by @J  Scott  He provides a great overview, but my market is a lot different. If some of you could chime in and share your experiences, that would be greatly appreciated!

J. M.

Thank you,

Jordan Sizelove

J. Martin · Answer

@Jordan Sizelove ,

@Jared Benson has good tips above. It can tough when you don't have recent comps. Here's where to start.

Are you trying to get comps for purchase of an existing property? Or the ARV (After repair value) of a property after it is flipped? The difference will be in choosing an average condition comp vs a rehabbed comp. It's night and day.

If you can't find any recent sales comps, you can look back further (and make rough adjustments for about % the market has moved since then), expand your area, or pick similar areas, which may not necessarily be adjacent. But all of these increase the variability of your estimate.. And as Jared said, this makes investors wary (aka BS!) You can also try calling pending listings and ask the agent if it sold for list..

I recommend searching google for Joe Metz Meetup and he has a meetup group in Fremont where they talk about ranking comps, and even have a spreadsheet they'll give you I believe..

Jordan Sizelove · Answer

When looking on sites like Realtor.com, I can't seem to find properties that have sold within the last 6 months close to subject property. What do you do then?

Currently don't have access to MLS. Should have it within the next fee months. Will check and see if I have any luck on county appraisal site.

Last but not least, how do you make necessary adjustments to comps when just starting out?

Wayne Brooks · Answer

The subject property is the one you're trying to find the value for.

Jordan Sizelove · Answer

Any feedback on above post? @J  Scott J. M.

Figured out a great way to find comps. On Realtor.com when looking at subject property, they provide a map at the bottom. I simply open another tab and type in the street name of subject property to see if any houses have sold recently. If there are none, I enter the street name that is a cross street, one street over, etc. Is this an accurate way of finding comps? Or should I be doing something different?

Now the tricky part is trying to make adjustments to the sale price of the comps. How do other BP'ers make adjustments for the different features of a property? For example, subject property is 3b/2b, 1300 sf., 1 car garage. One of the comps is 4b/2b, 1100 sf., 2 car garage. Is there a formula to make necessary adjustments (in this case the extra bedroom, 200 more sf., and extra garage space)?

Last but not least. What's the typical means of doing a comp? Do the majority of you use spreadsheets? Paper?

Looking forward to all of your feedback. Thank you!

Jordan Sizelove

Jordan Sizelove · Answer

@Jared Benson made some really good points. Thanks again!

J. M. Thanks for your response! I'm trying to get comps for a flip, ARV. What do you mean when you say existing property? What's the difference?

If I'm understanding correctly, I should be looking for rehabbed comps if I plan to rehab and flip?

Will I be able to find the % the market has changed on listing sites if I need to adjust for properties that have sold longer than 6 months ago?

Really gonna focus on comps to hopefully get my first deal soon. You both have given me some great feedback. Gonna try some of the things you two mentioned. I'm sure I'll figure this thing out sooner or later.

Gonna look him up right now.

Thanks again,

Jordan

Jordan Sizelove · Answer

@Wayne Brooks Thank you Wayne. I guess I wasn't very clear. What I'm really trying to find out is, based on your selected criteria, do you do a comp for every single property that fits your criteria? There's so many different listings.

@Jared Benson Thanks Jared. What exactly makes up a neighborhood? I know that some places have a specific name for that neighborhood. How do you know when a neighborhood ends? And what if there aren't any comps within 5 miles? Is there a way to search for properties that have sold recently within a radius of subject property?

How do you choose your "subject" property for comps when just starting out?

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