Trying to understand the formula used to get comps for my first rehab. I have two real estate agents give me comps on the same property and there was a $30k difference. I used Redfin, Bank of American Real Estate Center, zillow, trulia...my own estimate came close to one of the agents give or take a few thousand. Should I get a 3rd opinion? 

Any input would be greatly appreciated 

The similarity of recently sold properties in your area is key.  Not listed property, sold!  The method which the properties sold (short/auction sales, seller-financed, etc) and condition of the properties is also huge.  Days the sold properties were on market is also important.  Did those have exposure?   Trust a competent realtor over online sources.  Good question @Danielle Jones !

Comps generally have to be adjusted; sq ft, lot desirability, location desirability, number of garage/carport spaces, updated verses not updated, age of appliances  and major components, etc.  Just a list of "comparable sales" without this data is somewhat useless.

Originally posted by @Steve Vaughan :

The similarity of recently sold properties in your area is key.  Not listed property, sold!  The method which the properties sold (short/auction sales, seller-financed, etc) and condition of the properties is also huge.  Days the sold properties were on market is also important.  Did those have exposure?   Trust a competent realtor over online sources.  Good question @Danielle Jones!

Would you say that actually visiting the property, getting scope of work for improvement would affect thoe numbers? And to get down to it ARV is based on opinion and market, isn't it? So which numbers do I use to make my flip analysis?

Like @Wayne Brooks points out, you need quality comparable sales comparisons. Same types of properties and condition to get to a good ARV estimate.

From the ARV estimate, you subtract your repair/improvement numbers. I recommend J Scott's book on flipping houses. A true pro has outlined these things for you for very low cost. Take a little time to educate yourself. Glad to have you out there asking questions!

When I do comps, I do a matrix on a spreadsheet.  I compare the subject property with homes sold preferably within the last 6 months and within 1/4 mile.  I'll broaden those if I'm forced to, but try to keep them as close in time and distance as possible.   

I want a minimum of 3, preferably 6 homes.

I want the same number of beds, within 0.5 or 1 bath, same septic, garage and basement and close on SF and land area and whether it's REO/SS.

I calculate $/SF for the solds, and use an average of them to calculate the sell price of the subject property.  (Average of sold $/SF X subject SF for an approximation)

I then include a section on the current competition on the market.  The finished property needs to show well against the competition.  Otherwise, why is someone going to buy mine?

Then, I'll make adjustments for differences between the properties to come up with a projected market value.

Here's an example of an CURRENTLY AVAILABLE FLIP/REHAB DEAL in 02066 (if anybody is interested!!)  I've X'd out the address so as not to consider it as advertising.

On this one, there were not enough solds within my target 1/4 mile and 6 months.  As the header indicates, I had to broaden the search to 0.5 miles and sold within 12 months.

The "On the market now" were current as of the date of the analysis.

We're currently in a wild seller's market.  The Days on Market field (DOM) tells you everything you need to know about whether the pricing was right or not!

I hope that helps.

Do you own the property?  

If you don't I would look at one that is good at pricing properties in the target area as your agent.

@Danielle Jones  Getting a realistic and accurate value on a house can be very difficult. You've already seen how two agents valued it so differently.  I've been dealing with agents for a long time and I've had my license for a little over a year now.  When you get huge variations in value opinions it usually means the agent's own business strategy is effecting their opinion.  Some agents tend to undervalue properties so they can sell it quick while others will exaggerate the value to make the seller think they can sell it for more than someone else (just to get the listing).  Most agents though will try to be honest and accurate but it's just really difficult to nail it down.  Houses are just like everything else in that they are only worth what someone is willing to pay.  An experienced person can make a good educated guess but you won't know for sure until it's on the market.  

My advice would be to find an agent that's willing to give you lots of real estate solds data.  Ask for a report on the property with at least 10 to 15 comparable properties within the tightest radius possible.  Ask them to include as many details of each property as possible so you can see what the differences are. Then you can compare that information to the website data you have (Zillow, Realtor.com, Redfin, etc).  I also use tax values for additional verification.  

After you buy and sell a few similar houses you'll have a good feel for how to price them.  There will still be variables though like market strength and time of year that can effect the selling price.  It's an inexact science.  Good luck!   

Originally posted by @Danielle Jones :

Originally posted by @Steve Vaughan:

The similarity of recently sold properties in your area is key.  Not listed property, sold!  The method which the properties sold (short/auction sales, seller-financed, etc) and condition of the properties is also huge.  Days the sold properties were on market is also important.  Did those have exposure?   Trust a competent realtor over online sources.  Good question @Danielle Jones!

Would you say that actually visiting the property, getting scope of work for improvement would affect thoe numbers? And to get down to it ARV is based on opinion and market, isn't it? So which numbers do I use to make my flip analysis?

@SteveVaughan advise has hit the nail on the head. You really should educate yourself using some of the resources available here in BP for little money.

To address your questions, visiting the property will give you a very good idea of what type of work might be needed, but I would also highly encourage you to seek out and hire a property inspector, and separately a plumber to inspect the plumbing, either before putting in your offer or through due diligence to ensure you don't go over budget on construction costs. That property visit will help you to start an apple for apples comparison of market sale comps which will help you establish an ARV.

More specifically, ARV is a partially subjective matter based on hard data points, but where it becomes subjective is how variables are interpreted differently by different people. Theres no way to teach comp review in a forum. You need to see, hear, and then listen to how experienced people in the marketplace review and analyze comps. In some areas values change signal to signal, in others its block to block, and yet in others its position of the property on the same block. It would be difficult to value a property for ARV if not innately knowledgable about the marketplace/neighborhood.

When those who are experienced in buying properties in areas they don't possess such knowledge of they will locate people/professional who are knowledgable in the marketplace.

Now going back to your original question, you are experiencing different interpretations of the variables in the sale comps (assuming they are actual sales) and its here where you as a real estate investor earn your money. 

My suggestion is you teach yourself how to "read" comps, all the data points e.g. price per square foot, lot size, bedrooms, baths, number of rooms, and how to categorize by distance from the subject property (a 3bd 2 ba home 1/2 mile from the subject in the same zip code might be a far cry from a similar home 1/2 a block away).

Go look at comps as an exercise. Look up the value of a 3bd 2 ba home in your city in a neighborhood on the north side of town, and then one similar on the south side of town. Try to drill down on the value for each comparing it to similar closed sales within the last six months. Then compare them, and their supporting comps, to each other. What do you see? Values that are similar in each area? If not figure out why. Did one home have a new kitchen? Maybe a new master bath? Did one have a pool and jacuzzi? How about new windows?

Now finally, how does the north side of town compare to the south side of town? I'd venture to guess you're going to find a different set of values. Yet, because of these variables, and sometimes because someone is trying to sell you, you'll find people will use the north side values to set value for south side properties (east/west, whatever your towns atypical designation might be). One more point, it might not necessarily be the north or south side of town, it might be the north or south side of a particular neighborhood.

In my old neighborhood a home on one side as opposed to the other side sold for as much as $750,000 more for similar types of properties. Data points, location, and similarity all come together when valuing real estate.