I just found a great resource called ReZamp.com. But I'm a little confused as to how a house can be valued at one price, but be selling for a different price. For instance the website lists a property at 174k, but says it's value is 243k. So I'm confused as to why the house would not be selling for that amount if that is what it is valued at. Could someone explain this to me?
The comps only tell what similar homes in the area have sold for. If they're low, that could mean someone got a great deal. If they're high it could mean someone overpaid. It's just the facts of what was paid for the properties. In the end, the true market value for a house can't be determined until you have it sold. It's worth exactly what someone would be willing to pay for it. I'm not familiar with ReZamp (I'll have to check it out) but if it's anything like Zillow or Trulia, the estimated values are pretty much worthless.
I just discovered it today, so i'm not sure how accurate it is. It will actually let you find a property and then you can manually adjust the comps if you'd like. So you can get the basic info on a property and then add or subtract them from the comp. Seems to work pretty well to me.
But that was mainly what I was wondering. I assumed that the house was worth what someone was willing to pay for it. If the comps are 20-30% higher I get a little confused as to why someone wouldn't list it that way. All things being equal of course. If the house is missing the roof then it would go for less of course.
Many of these value estimates are very simple mass appraisal algorithms that are employed by the site you are using. They take things like market trends, local sales, and comparable listings in the area and generate a price to give one an opinion of value for the property.
While it is a cool tool and works in some areas, I recommend not paying too much attention to it. These algorithms do not count for deferred maintenance, condition of the home, among other things.
Also, this property may be a short sale or some other type of distress sale that has parties with ancillary interests in the deal. It may be listed at $174 but they may only accept $250+ pending a true appraisal.
I don't look at zillow or other "comps" for our area whether rental or for sale. The problem is in our area it changes neighborhood to neighborhood. While comps are helpful it is important that you are comparing apples to apples. So closing costs to no closing costs, etc. Also time of year and whats in the house makes a different.
We buy short sales and those are typical cheaper (sometimes much) than traditional. So the appraisals will often through those numbers out.
It could be an algorithm estimate your looking at.
Could be marketing fluffery.
It could be a killer deal.
Make sure to do your own research gather sold comparables and make your own estimate to the worth of the property.
Awesome! Thanks for the responses!
Do any of you have a link to a good blog or article post about the steps to take when analyzing your comps? I've read a few, but I feel like they are a little broad in there explanations.
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