Alternatives for running comps?

Question

What if a property doesn't have any exact comparables, but has very similar comparables.

How should I structure my comps? Could I go by square foot ?

For example, If my prospect property is 3/1/1100  for 180k and my prospect comparable is 4/2/1100 for 170k.

Could I use the comparables for the 4/2/1100.

Bob Okenwa · Answer

@Armani Emon

There are many instances in which you won't be able to find an exact comp to your property. Unless you're looking in a more recently developed subdivision, the homes in a given area will differ slightly or greatly.

When doing comps, you'll need to take into account major factors such as location, bedroom/bathroom count, square footage, lot size, and interior finishes to name a few.

If a 4/2 is going for 170k, odds are the 3/1 at 180k is overpriced unless it is vastly superior from an aesthetic or acreage standpoint.

Evan Polaski · Answer

@Armani Emon, from the prior two posts, which are both totally accurate, this is one reason consulting with an experienced real estate professional can be very beneficial, especially when starting out.

Standard appraisal practice is to find the most recent sales, in the small radius of your subject, then start adjusting for beds/baths/size/finish quality/land/etc.

While true appraisals have a very systematic way, I look for as close as I can find overall, and then just do a pro's and con's list that should start settling into a standard value.  As with any comps though, your opinion of what a bedroom is worth, or a garage, may be different than someone else, but it should generally get you close.

My wife and I have been investing in real estate for 10 years now, and we still disagree heavily on how much different aspects will effect value.  Moral: there is no science, it is a bit of trial and error and continuing to trust your instincts, if they haven't led you astray yet.

Jonathan Greene · Answer

Square footage of the home and lot is often misconstrued when it comes to comps, especially with appraisals. There are times when you can't find your comp and when that happens, you need to find properties that are the closest to yours whether they are exact BR matches or size matches. The reason square footage is a mess is because of how it's calculated and how you use your space. 1,000 square feet of an open floor plan is way more valuable than 1,000 square feet of compartmentalized rooms, but an appraiser will likely call it even. A 500 square foot backyard of grass is more valuable than a 500 square foot yard that is paved, but an appraiser will likely call it even.

If you are trying to comp for ARV you want to be careful so you don't convince yourself you can get way more than you can. If you are trying to comp for a list price for a flip, you want to pay strong attention to a half-mile radius of properties (a mile if you are more rural) and really go deep on how long they were on the market and what they sold for.

Armani Emon · Answer

Thanks !

Alternatives for running comps?

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