Find a better real estate agent.
I agree with @J Scott . Or better yet, if FL discloses, run your own comparables. It may be tough finding 3-5 solid, renovated homes of similar size and style, recently sold and close to your subjects. You need to adjust when you can't find exact matches.
@Dan Carbone if there are NO rehabbed homes, then all you can go off of are the comps in the area.
However, the two ways you should be using are:
1. Your own research by finding the rehabbed comps on Redfin or Zillow
2. Find an agent that is entrepreneurial and who will hustle to find you the comps you need.
Best of luck.
Thanks for all of the advice guys, I appreciate it. Yeah I agree I think I need a better agent. Do you guys ever try to push the market and list your home for higher than the comps if you feel your Flip is better quality? If so how successful have you been doing so and how much more would list for if the comps were say $250k?
@Dan Carbone your question is impossible to answer here. This is exaclty the point: a good agent will price the home right. Each market id different. In certain markets in SoCal you can price homes lower to create a bidding war. Also, the tricky part is that you must know what level to remodel the home to. If you overdo the rehab, you'll waste your $$ as the market will never pay for the quality you have done. On the flip side, if you go cheap, you will not get the price the comps show...
This is something you must learn in your market by doing. Go conservative on all your numbers so you do not get burnt.
@Dan Carbone Can’t even find a garage for 250k here.
We go through each & every open house in the area of our flips. In fact we also just went to the local Tax Lien auction & a much smaller (total gut job) home one block away from our flip sold for 50% higher than what we got our flip for.
I have a friend who calls me constantly about the rehab he is doing to his principal residence to see what improvements will pay off. He wants to sell it this spring & he still hasn't bother to go through any similar homes that were listed & sold on his street or n'hood. His agent is also a waste of time.
You definitely need to find a better agent, hands down. Assumptions: I understand not wanting to overbuild your neighborhood. Basic rehabs needed to get it up to market. Comps should stay within 15% of sq ft. within 10 years built. as close to bed/bath count as possible.
Hopefully this hypothetical scenario helps put things in perspective.
4 houses. 1/2 mile radius. 6 months sold. same neighborhood. Built between 1970-1980. 1500sq ft. 3bd 2ba.
1 well maintained. not updated since build.
1 some updates done in 1990's. well maintained
1 remodeled in 2000's.
1 (your house) fully remodeled in 2018 suited for current buyer's tastes in your local market.
Which one should sell for the most out of the four? It shouldn't be a huge adjustment. However, a newly remodeled home should be at least 2.5% more than #1 and 1-1.5% more than #2 and 3.
Ideally you find comps (at least 1 or 2) that are recently remodeled. That is very helpful in establishing ARV. But, you should be finding ARV before you even think about buying the deal. This determines if the scope of work is even worth it.
It sounds to me like you are trying to figure out if a deal is in fact a deal based on working backwards off the future exit value. J hit it on the head, get a better agent. Next, you need to learn your market and that is accomplished by studying every closing in your target market, visiting every open house you can and compare the ask price, vs the size, finishes, amenities, etc. Track what they sell for and compare list price vs sold price, A good agent can provide all of this data to you but you must do the physical travel to the open houses and learn the market yourself. Good agent or not, you need to run your own numbers as well if you want to make a business out of this.
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