Pulling Comps

7 Replies

Hello Everyone! I'm new here to BP and wholesaler. I have several houses on my radar and are needing to pull comps. I currently watch the housing market via Realtor.com and Zillow.com on my phone. Are these good places to pull comps are is there a better way/place?

it might just be me but I dont see the question

Having access to the MLS is a key source of comps - it is useful because it doesn't only show what is listed, like the sites you mention, but also what is pending, expired, etc. which all provide clues as to the state of the market.

Second, you want a source of public record comps, as more and more deals are happening "off-mls", and these too provide important insight into the state of the market. Ideally that source will tell you the type of comp - REO, shortsale, flip, etc.

Finding the best comps is more art then science. It also depends a bit on your goals.

Two keys in my mind:

1. Understanding comps from a buyers perspective - at this level you really need to get off the computer and go look at houses. Any impression you have from comps out of the computer will be easily trumped by the knowledge of a buyer who is actually out looking at houses. Not getting in the field enough is a key investor mistake imho. 

2. Understanding the comps from an appraisers perspective. Even with all the talk of cash deals, the majority of sales (60-70%) require financing. Lots of pressure on appraisers to be conservative. Best to understand what comps they are most likely to use - ie the most obvious and easiest to defend. Requires high art to convince them to use your comps.

Zillow and Trulia are horrible places to pull comps. You need to use the MLS.

Originally posted by @Sean OToole :

Having access to the MLS is a key source of comps - it is useful because it doesn't only show what is listed, like the sites you mention, but also what is pending, expired, etc. which all provide clues as to the state of the market.

Second, you want a source of public record comps, as more and more deals are happening "off-mls", and these too provide important insight into the state of the market. Ideally that source will tell you the type of comp - REO, shortsale, flip, etc.

Finding the best comps is more art then science. It also depends a bit on your goals.

Two keys in my mind:

1. Understanding comps from a buyers perspective - at this level you really need to get off the computer and go look at houses. Any impression you have from comps out of the computer will be easily trumped by the knowledge of a buyer who is actually out looking at houses. Not getting in the field enough is a key investor mistake imho. 

2. Understanding the comps from an appraisers perspective. Even with all the talk of cash deals, the majority of sales (60-70%) require financing. Lots of pressure on appraisers to be conservative. Best to understand what comps they are most likely to use - ie the most obvious and easiest to defend. Requires high art to convince them to use your comps.

I completely agree with Sean...as an appraiser and a broker I can assure you that I don't even look at Zillow and/or Trulia, complete waste of time...you need to get into houses when they are on the market and then see what they actually sell for in the end, start by going to open houses, take MLS sheets and make notes, than see what it closes for in the end...information is the key, MLS data or access to other data sources that will provide data and info on county sales will pick up non MLS sales...use a good broker and/or an appraiser and pay them for their time and effort...just my opinion !

I'm not sure about your area of Alabama, but in my area of Tennessee, you can also use public records. Our site is called Tennessee property data. In rural areas, many realtors are not even a member of an MLS. But, MLS has more data and interior pictures. It is good to use MLS to see what the realtors say, but it is good to use public records to to check up on the realtors.

Along the lines of what Sean said, sometimes realtors can use unrealistic comps to support the price they want.  As an appraiser, I'm actually trying to use the best comps.  But, I need a real good reason to leave a specific area for a higher priced house.  If an investor can tell me why those comps are more similar than mine, I'll use them.

Depending on how dense your area is will determine your criteria. I search for all sales in the last year that are within 200 sq feet of my house's size, and that were built within 10 years.  But, I'm in a rural area.  Some areas you will search back only 3 or 6 months, and you would also limit your search to within 1 subdivision or a 1 mile radius or 5, 10 or 20 mile radius.  

Realtor.com and Zillow.com can be good tools, but I wouldn't base a real business on them.

I second everyone else so far that Trulia and Zillow are a complete waste of time for running comps. Completely inaccurate data in regards to market value. Partner with a trustworthy real estate agent. One bad deal can cost you a lot more than paying a real estate agent's commission. They can run comps and pull pictures from previous closed transactions. 

Thank you guys for all the great tips. I apologize, I shouldn't have started this post as there is already several on this topic. Thanks for the grace to this newbie. I used to live in TN, Chattanooga to be exact. Boy I miss the trees in the fall.

Wish me luck!

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