Quote from @Elaine Goepfert:
@James Hamling I'd like to know what your opinion is on how to get a "rock-solid" comp? I was sent comps from my realtor supporting the ARV and surpassing it. Then to support that I received a appraisal supporting that number. So, to recap, I trusted my realtor and the comps sent to me by him and the lender and the ARV appraisal given to me by them.
So outside of being a realtor myself, how would you have accomplished getting this "rock-solid" comp? I'm here to learn.
That right there was your first mistake, you didn't do one, you blindly accepted what others told you.
And keep in mind, those others had a profit motive for seeing it appraise as it did, they were not impartial.
You never EVER do a flip without having done your own comp. This is paramount.
You yourself have to do the research.
And a flipper market comp is totally different, if done correctly.
Because your NOT just looking to get comps to peg a recent sold like if listing, no.
Your are ALSO doing comp's to peg exactly what value the market places for different conditions of that home, what value it places on say an updated kitchen vs outdated, or facelift vs full reno, high end vs mid level. And finding what components in what condition = what $ and time in sold.
Than your looking back 18 months at solds and your doing segregated comp studies of 18mnths ago, 12, 9, 6 and last 3 months. Yes, it's a lot of work but it's a lot of key data. When you do this you will KNOW not guess what the market values in components and condition, and how much they value it as. So you can peg if doing that is ROI or not, what holds how much ROI from reno.
And your pegging market vectoring. When bisecting the historical comps you can see what trend is rising, falling, crested and descending or taking off.
because when you flip, your a housing fortune teller. You have to know at start what the end months away will be, you build today for tomorrow.
You did none of that.
2 people with a profit motive told you "a" comp for that day, with 0 data of the other things. WORTHLESS.
When I was "Mr Flip", I walked in day 1 of a property, folder under arm, my team trailing frantically taking notes because i was just walking room to room detailing every last detail of exactly what we were going to do, what I expected in finished product, and why we were doing it that way.
Yes, I knew everything to the last detail because I spent those hours before hand doing my homework, getting the data and the data told me what to do, what not to do, and how to do it, to what level.
And at end, I can't tell you how many people begged to know how I pulled off sold in 72hrs at my price. Were talking 2010,11,12 ok, and I was getting multiples in hours/days.
because, I put in the work. I was working FOR the market and I was listening to the market.
I had a one where a big name broker gave his thoughts and than I told him what it was going to be. He asked how i could possibly know to that detail how it would sell in coming weeks. I said "oh, you want detail, ok how about this" and I data dumped. I told him my buyer was going to be a white collar professional in late 20's to early 30's, 0-1 kid, income of this, credit of that, drives these types of vehicles, etc etc, ADN than the ballzy shot of shot's, I gave 3 places of employment. I kid you not.
A few weeks later, sold, he followed up and asked. Buyer was just about to turn 30, female, no kids, and worked at one of the employers I said, drove one of the cars I named.......
THAT is the power of data.
You give me access to enough data and I can tell you what you'll eat for breakfast in a week and what color clothes you'll pick for that day.
A flipper, a PROFESSIONAL flipper is NEVER surprised by the end, ever. Even the surprises are predetermined.
Data, data, data.
The hardest part when starting at it is keeping self 100% unbiased, just letting the data take you where it will. It's super easy to work to be biased in the data, way too easy. It's really hard to wash out all emotion.
I have an appraiser on my team and her job is to argue with me, literally, no joke. Her entire job function is to try and prove me wrong, find a flaw, argue the opposite. Yes, I pay a person to keep me humble, lol. That's the level of data dedication you must hold for accuracy.
