Are realtors necessary to correctly analyze deals?

29 Replies

@Justin Lewis

That depends on what you consider valid. For instance some people ask "Does proof of funds have to be a preapproval letter or can a screenshot of a bank account work"?

The answer is "Whatever the person on the other end accepts. Same with your comps. Whatever you the seller accept. Or whatever the buyers bank accepts as comps are what matters.

I know it''s not a cut and dry answer, but it's the best i can give you.

Good Luck!

@Justin Lewis I look at it like this. A buyer is going to use a realtor, and they're going to base value on the realtors data, so why not use the same data? You can use what ever data you want, but none of it matters if it's the wrong data.

@Justin Lewis it depends on your experience. I tend to pull my own comparables, from Zillow, Redfin etc and then confirm on the county assessors website. In my state the info is easy to gather and look at. If you know how to do this, then no a realtor is not "necessary". If you are unfamiliar and don't plan to learn, then yes they are.

@Justin Lewis Being a Realtor I do have access to more platforms than the average Joe. With that being said, as long has you are getting your comps from a reliable source and you know how to adjust for the differences you should be ok. This is literally what we do each and every day so agent are more refined at it and it can take them half as much time if they know where and what to look for.

The MLS is a great tool that makes pulling good comparable properties easier & faster. You can find comps on your own looking on consumer & county sites, just prepare for it take a little more time & diligence to squeeze & gather the same data a Realtor can access in a few clicks.

Knowing what makes a good comparable, and adjusting appropriately is where the real magic happens though! If you are new to analyzing & interpreting real estate values, it maybe worth working with a Realtor or seasoned investor who is an expert in an area you're interested in. They can guide you through the analysis process, and explain how they selected their comps and chose their adjustment values. :) 

But as Mike above says, at the end of the day, a home's value is whatever a buyer & seller agree on. There are not cut & dry rules that apply everywhere. And what constitutes "fair market value" can vary widely even between real estate professionals. So it's probably a good idea to work with an expert you trust until you feel like you can confidently sift & interpret market data. :) Hope that helps! Best of luck!

Originally posted by @Jason D. :
@Justin Lewis I look at it like this. A buyer is going to use a realtor, and they're going to base value on the realtors data, so why not use the same data? You can use what ever data you want, but none of it matters if it's the wrong data.

 I agree Jason!

Here's the truthL you wouldn't be asking this question if you were working with a quality realtor. I run comps for my investors before they buy, I analyze the deal in every direction and help them figure out their ARV. I don't just look at what's sold, but I look at what is active and pending as well. I know the angle we're going to work to market the home on resale and stay engaged through their entire renovation.

I've done deals out of market where I don't have access to the local MLS. In these cases I use sites like Zillow and Realtor.com as a starting point to find out what has sold, double check against the county assessors office, and put together a basic CMA. But I always team up with a local agent for the actual listing, and there are always comps in their MLS that I don't find on Zillow, Realtor.com, etc.

@Justin Lewis Realtor here! Another thing to research, the information you pull from the county and websites such as Redfin and Zillow may be completely inaccurate depending on your state. In the state of Missouri, we are a non-disclosure State. A lot of agents withhold the sales price along with other information. Therefor, those websites such as Zillow grasp at straws and will slap anything they can online. You may need to rely on your Realtor for the most accurate information depending on what state and area of that state you’re investing in.
@Justin Lewis Zillow and Redfin have pretty decent comp data for single family homes. I am noticing I need MLS data to properly analyze multifamily dold data. Now that doesn’t mean that agents do a good job. Most agents simply pull comps in 5 mins and forward it to you and don’t spend any time analyzing it for you. I would not call an agent if I had MLS access.
A REALTOR will have access to the most complete and accurate sales information. A GREAT REALTOR will be able to expand the CMA further and include not just comparable homes but additional neighborhoods that buyers would find equally desirable. I have not found a way where buyers can pull that information from Zillow or REALTOR.com.

@Justin Lewis the quick answer is no. There is plenty of publicly available data sources and if you have the correct skills to analyze, you could do it yourself. Similarly, a mechanic is not required to repair your car, you can get repair manuals and parts to do it yourself. The reason you would go to a realtor or mechanic is because of their specific skill and expertise. Another reason may be to save time by letting someone who specializes do the work. 

Many advanced investors do all their own analysis. Some even get their realtors license specifically to have access to better tools, lock box access and save commissions.  That works great for many people.

Personally, I work through a realtor, but I do my own analysis too. I use my realtor as a sanity check on my analysis. My realtor often gives me input I had not considered, so I find it helpful.

Like with anything it is hard to generalize. A good realtor is worth their weight in gold, but an average realtor may just slow you down.

That depends on the information your realtor can provide, and what information you have access to. I've found I can do as good a job as they can in most markets. However, it takes a confident knowledge of that market too. It also takes time, so there have been times where my time was better spent elsewhere and I had them do it. It's about 50/50 for me. I think I like to do it because it keeps my skills sharp.

The folks on this thread who answered yes, have a good realtor and understand the value. The folks who answered no either don't know, or have figured out how to pull decent numbers themselves.

This falls into the category of my mother in law. I swear I will write a book one day about how doing the opposite of what she said made me millions.

If you pull your own data, you're taking out of the equation the person who chose this as their career. Sure you can go to AutoZone or PepBoys and buy an alternator. With a bit of help from YouTube you can probably install it easily enough...but what if you can't? Is it worth it? Some say yes, some say no. I can change my own oil, but it's way easier to give the drive thru lube 30 bucks and do it on a Saturday morning. Then its done, I don't have to worry, and it's no trouble.

So yeah, you can probably find 99% of what you need if you know where and how to look. I'm a numbers guy and I run my own calculations while I'm waiting on my realtor to respond. But I always run my data against his, and when we differ, I go with his (provided I can ask my questions). It just seems foolish to pull your own data if you're not a realtor and have all the access. That logic is the same as investing based on what you heard someone heard.

Also, if this is motivated by your desire to not pay commission to someone, you're doing this whole thing wrong. I had a FSBO try to get me to raise my price by the cost of commission. I tried to get my daughter to throw a rock at him, sadly she wouldn't.

@Justin Lewis No . I’m sure there are absolute expert realtors on here and these people know the business inside and out but sadly most realtors ( atleast in my area) are completely incompetent and offfer little value to an investor . The only good thing the ones I’ve dealt with offer was free daily access to the mls which along with Zillow trulia realtor.com and my local recorders office allows for all the information I could ever need to run analysis and do my own comps . I’d suggest you learn for yourself because your average realtor wouldn’t know a good opportunity if it fell in their lap * in my experience .
Originally posted by @Joe Splitrock :

@Justin Lewis the quick answer is no. There is plenty of publicly available data sources and if you have the correct skills to analyze, you could do it yourself. Similarly, a mechanic is not required to repair your car, you can get repair manuals and parts to do it yourself. The reason you would go to a realtor or mechanic is because of their specific skill and expertise. Another reason may be to save time by letting someone who specializes do the work. 

Many advanced investors do all their own analysis. Some even get their realtors license specifically to have access to better tools, lock box access and save commissions.  That works great for many people.

Personally, I work through a realtor, but I do my own analysis too. I use my realtor as a sanity check on my analysis. My realtor often gives me input I had not considered, so I find it helpful.

Like with anything it is hard to generalize. A good realtor is worth their weight in gold, but an average realtor may just slow you down.

in full disclosure states I agree but in non disclosure states MLS is the only way to get a true read on values.. short of ordering an appraisal..

Originally posted by @Dennis M. :
@Justin Lewis

No . I’m sure there are absolute expert realtors on here and these people know the business inside and out but sadly most realtors ( atleast in my area) are completely incompetent and offfer little value to an investor . The only good thing the ones I’ve dealt with offer was free daily access to the mls which along with Zillow trulia realtor.com and my local recorders office allows for all the information I could ever need to run analysis and do my own comps . I’d suggest you learn for yourself because your average realtor wouldn’t know a good opportunity if it fell in their lap * in my experience .

 I was waiting for the incompetent realtor  LOL... I think what most folks don't understand is realtors like other professions have niches and if your in the landlord game and income producing property game  most resi realtors that sell to home owners are not versed at this and should not be expect to be  its not what they do..  you want to contact a broker that specializes in income properties and rentals IE a commercial broker or like a Jim Wise you see post here who is not really a resi broker and does most all his business with investors he will know very well what props are worth.

But MLS is the barometer of true values.. Zillow and those other sites are widely inaccurate .. For instance in CA some developers and I would never do this will intentionally pay more transfer tax.. so that when someone pulls the deed and is doing valuation based on transfer tax it shows the value higher than they actually paid for it.. common ploy.. But MLS data is by rule and fear of major fines very accurate.. and in addition there will be notations if there were seller credits cash sale bank loans etc.

That’s why I made a distinction by saying most are incompetent and of little help to “ investors” .in my little experience  Realtors are great if your looking a single family  dream home for your family to live in .. but  my thing was from an investors vantage point there are other ways and it would do the poster well to use a variety of methods on his own instead of relying on a commission based system 

Originally posted by @Justin Lewis :
Do you have to have comps pulled from the MLS by a realtor or can you just pull comps from services like Redfin or realtor.com ?

Redfin gets their data from the MLS. It's just as good in 99% of cases.

Originally posted by @Justin Lewis :
Do you have to have comps pulled from the MLS by a realtor or can you just pull comps from services like Redfin or realtor.com ?

 If your goal to live in the property, let the realtor do the work.

If your goal is a rental, it's more important to see what like kind properties are renting for in that neighborhood and work backwards. That is, can you buy a property that rents for enough to generate the cash flow you are looking for.

If you are looking to Fix & Flip, you have to go with what an appraiser would do. That is generally, 3 properties of like kind sales, with 1/2 mile within the last 6 months. That is a little hard to do most of the time but it is a good rule of thumb. Go to Redfin, enter the zip code, go to "More Filters" to the far right, scroll down to "SOLD", click on that, select "LAST 6 MONTHS", scroll down and click "APPLY FILTERS", zoom in & out of the street the property is on until you get some samples, scroll down on the right side where the photos are until you get to (Download All). That will export the list. Open the file, sort by Sq FT, Date Built etc until you find what you are looking for.

A lender will lend on what an appraiser says it is worth, not what a realtor says it is worth. Your buyer is your customer. It is their lender you are trying to convince you have priced it correctly. The lender doesn't care what the realtor or the buyer think. The lender has to go with what the appraiser puts down on the appraisal. Lots of deals fall apart because lots of realtors don't understand how things work in the real world. (I once upon a time was a loan officer).

Suggest a professional do it for you. Appraiser if needed. Distance, gla, age, like style properties. In city lenders want 0.5 miles, +/-10 years, 10% threshold. Last 90 days with difference adjustment (retail).  Easy say than to be done right. Offer to pay.

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