A better approach to finding comps
So I just wanted to share a little of my experience with the BP community. I am doing wholesale deals in Indianapolis and I am always running comps literally on a daily basis. I have learned a very important aspect to determining values for properties. When you are looking in your 1/4 of a mile and within 6 mo parameters you should also look up (from tax records) what subdivision the subject property is located. I mean just 2 days ago I was looking up property values and if you just did the 1/4 mi radius the comps we like 30k. Then, when I used the subdivision as my only area for comps (I had to go back to a year to find enough) then I saw that this specific neighborhood has a completely different style and price of house. Like 2 times what the neighborhoods around the subject property's subdivision had.
This is something that my mentor has been showing me lately and I think it has been a revelation for me in estimating my offers on deals. Please just take this for what it is worth I am not an expert I simply just learn as I go and this is what works for me-better than just drawing a radius around my subject property. Hope this helps someone out there!
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Real Estate Agent IN (#RB14052302)
- Barton Family Realty
Subdivisions help but... Style of house is huge in some areas but not all... A bungalow vs a 2 story, given the same neighborhood, sq ft, amenities, bedrooms, and baths can hypothetically be 125% higher in value just because of historic charm. Same with an all brick home, property on one side of the highway vs the other, in a certain school district, a special neighborhood association, or top of the hill vs bottom... These are all important factors in making a usable comparable search.
You really need to understand your markets beyond the "subdivision" and "draw radius" tool. Before you start comparing, pull up a google map and just look for 30 seconds... what are the natural indicators (major roads, intersections, etc); take a quick look at topography, is there a ditch or a river that runs in a certain spot?
These little things can help you pick out outliers that need adjustment to be used as a comparable. From a quick analysis standpoint, IE: this house is worth between 70-90k these details are not as important but when you are trying to really hone in... very important
Hopefully there is something usable above. Best of luck investing!
If I could add my two cents here. I've done comparables in which my subject property and the comparable had identical square footage and lot size, both three bed two bath, built within two years of one another and were only a quarter of a mile away. Take a wild guess as to how close they were in price? Well, the subject property was $120,000 less than its closest comparable.
When I went through some of the pictures and street view on Google Earth, I noticed that both properties were similarly built, although they may have had different floor plans, but the most important difference was the neighborhood/subdivision.
The closest comparable was part of a high-end, gated community on the south side of a "mountain," with a phenomenal view of the ocean. The subject property was located on a flat plane, so to speak, with no view of the ocean and closer to the busier streets of the city.
So even though the subject property could have been had for significant discount there is no way in the world it would have been worth its closest comparable.
Some people say that finding comparables is both an art and a science and I must say that it's actually much more of an art than a science. It really pays to know your neighborhoods and subdivisions. And this goes for everyone not only wholesalers but also flippers and real estate brokers.
@Stephen Barton I like to search by legal description when running comps. Seems to work well.
I will give that a try @Ben G. my mentor has been telling me this for weeks now! Ha ha! Guess I needed that extra kick in the right direction thanks!
I fully agree with the "art" side of pulling comps @Patrick Britton it is not an exact science! Wow good stuff! Thanks.
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Real Estate Agent IN (#RB14052302)
- Barton Family Realty