Im a newbie wholesaler! I have not actually wholesaled a property yet but I have one property Im working on.
I recently called a real estate agent and told him I am looking for a real estate agent that can do CMAs for me. He has never worked with a wholesaler before but was interested in what I am doing ... .. or trying to do lol.He told me to meet with him this week. ... ... What are the things I need to tell him to get him to come aboard and what can I do for him so this business relationship can be beneficial to him as well !?!?!?
Ask him if he is looking for new listings when he says yes tell him you will refer ones to have him list that do not fall into wholesale criteria.
1.pay him for the cma's.
2. provide him leads.
How about "I'll pay you $50 for each CMA you do for me."
That said, you really just want the data. If you want to make it in this business (fix and flipping, wholesaling or buy and hold) you MUST learn how to do your own accurate valuations. Valuation is far too important to leave it to anyone else. And you need to see ALL the comps. Because an appraiser may choose different comps than the CMA. So you MUST know what surprises lurk out that that may break your deal.
can you elaborate a little more in detail! I really appreciate your incite sir!!!
I really like a young jedi
I'd be very hesitant to have to rely on a real estate agent for a CMA. They tend to be overly optimistic in their numbers.
I think Jon is right on the money with his post. You really should be able to come up with your own estimates.
As long as your not dealing with really tiny towns (which I do sometimes so that can be a bit tricky), you should be able to use realtor.com or zillow to figure out your estimated value. But do NOT use zillow's estimate. Use zillow to get the comps you need to come up with your own estimate.
To me, I have a pretty simplistic approach to estimating.
In Zillow, I enter the address of my home and click submit.
I then modify the default filters based on my subject property's key characteristics: Bedroom count, square footage and age of home.
So if a 3bdrm, 2bath home with 1,500 sq ft built in 1970, I change the filters to:
Bedroom count 3 or more.
Square footage: 1250 to 1750
Age of home: 1940 to 1985.
Anything sold in last 12 months.
And be sure you're zoomed in on your current property and then zoom out so you're within the subdivision or, if that doesn't pull enough, then so you're within a half mile or mile or so.
That should give me a pretty good list of comps. I'll zoom out if I need more.
Then I try to find homes as close to mine as possible. Typically, you'll find a lot of similar properties with the same characteristics in that subdivision. I think the builders all used the same set of models. :-)
And then be willing to make some adjustments.
So if you have a 3/2, 1,500 sq ft with a basement and the best comp you can find is a 3/1, 1500 sq ft, with no basement, then you want to make some adjustments. Add some more to the sold price for the 2nd bathroom (5k) and the lack of a basement (10k).
There's your estimate.
There are some other items too that you need to account for - bedroom count, bathroom, lot size, garage, etc.
But its a pretty good start to being able to hit your appraisal numbers.
@Mike H. covered the process for adjusting comps to get to a value for your property. The reason I say you need to look at ALL comps is because you don't know what ones someone else will choose. There is no hard and fast value for a property. Any appraisal or CMA is just one person's opinion. Someone else may come up with another opinion. Because you can't control their selection of comps, you need to have an idea of the range of possible values.
Many, many years ago we were considering moving to Sugarland, TX. We were working with an agent that could describe the insides of every house we drove by. And say what it was worth. At the time I was quite amazed at her ability. I've since realized this is part of the game if you want to be good at this business.
An additional insight is that the best areas for investment have plenty of uniform comps. An ideal investment subdivision would have just a handful of floor plans and plenty of recent sales at similar prices. If you're working in an area where the comps are all over the place it gets much more difficult to put a firm value on a place. If you're in an area where there are few comps and a lot of variation in the properties it becomes a guessing game.
Find out how long he's been a Realtor, and what formula he uses to come up with his comps, like the distance from the subject property, list/sale price var%, sq. ft. var%, year built variance, how recent are the comps, and so on. You have to feel comfortable he's got good comps, which should definitely include Sold listings.
Actives only tell you what people are trying to sell their property for. Active With Contracts only tells you an offer (you don't know how much) has been accepted, just as Pendings do.
I would also ask him to put up a few Expired comps that are based on his formulae except list price.
Solds tell you what to do. Expireds tell you what not to do!
Make sure that if there are flip homes in the Sold comps, that they were financed, as this means the bank appraised the home. You'll spot a flip home from the description and photo, then you can check public records to see the sold price history.
Finally, meet him somewhere with an internet connection, so he can show you face-to-face. He shouldn't mind, as you don't have access to the MLS, or you'd be doing your own CMA's.
Don't forget the bottom line, is that he is looking for your business, so if he's interested in a working relationship, you could be onto a winner. However, he'll get bored of doing CMA's pretty quick if there's no money at the end of the day.
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