I've been playing around with comps but I'm struggling a bit on how to account for the stylistic differences of a home (or whether that matters). Here's an example:
Subject house is a foreclosure listed at $86k. 4 Bed / 1 Bath. Given its square footage, I thought it would be a good candidate to conver to a 3/2, so I started trying to find comps that were 3/2 within a few streets that sold within the last 90 days. My comps sheet is below, which was inspired by J Scott's file he shared here at BP.
So here is my problem. The subject house is stylistically different than the comp houses I was able to find (subject house is all siding, comp houses were all brick ranch). The subject house is similar in design and layout to many other houses on its same street, but those are all 2/1, 3/1, or 4/1 properties, none of them have recent sales, and the highest Zestimate on any of those homes is $85k (and I know Zestimate is largely useless).
My comp analysis suggests that the ARV of a 3/2 would be in the neighborhood of $115k.
So, a question to all the flippers, how would you account or adjust your ARV calculations for this? I would expect that the comp properties have much more curb appeal than the subject property despite the square footage and metrics being similar-to-equal on paper. Is it foolish to assume that just because the house matches on paper, that it could fetch a price tag that is (conservatively) $20-$25k more than anything else on the street and in that style?
I know there is no perfect answer, but I would be curious to hear how experienced flippers account for these sort of factors and adjust their analysis.
I think you're asking a really great question here. It's the right question for sure, one that others may have skipped over.
Can you find a similar neighborhood nearby to see if style is having an effect on value in those areas?
Also, I think it will depend on the quality and style of the interior finish as well. If your rehab brings it stylistically up-to-date, then that seems to be of utmost importance to buyers right now over and above the curb appeal.
Curious to hear your decision!
I'm hoping some others might chime in on how they account for this type of thing. Obviously, not all houses are created equal, but comps are comps and there's got to be some way that people are able to quantify these things.
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