Running comps, am I way off or is the wholesaler? Help! D:
I saw a deal recently from a wholesaler on BP and I wanted to run something by some of the more experienced investors. I'm well aware that most wholesalers tend to "dress up" their ARV numbers and "dress down" their rehab costs. In this case, I felt the rehab costs were very reasonable, if not spot on. The CMA he provided was really disturbing though... (or am I just ignorant? Help!)
Here is the search criteria he used to pull his ARV comps value:
- 12 months of sales
- Living area of +1,400 sqft of subject property or below (Subject is 1,200)
- 1.21 Mile radius from subject property
- Price range of $250,000 or above
WOW, I have a real problem with 3 of the 4 bullet points here. Here is what I was taught a good comp should be:
- 6 months of sales
- +/-200 sqft of subject property (1,000 - 1,400 in this case)
- 0.5 miles from the subject property
- same ba/br or close to it and adjust
- do not cross major boundaries such as a different city, freeway, major road, etc. because local markets vary significantly
I'm not happy with this person using 12 months of sales data, but okay I get it. He tried to fudge a little. It's the other two that #%$@ing piss me off. That radius is VERY SPECIFIC, almost like the seller was trying to include VERY SPECIFIC COMPS to help his ARV values. Also, who in their right mind would EVER include a sale price range limit when finding comps?! If you have really high or really low numbers, you look at the pictures and geography and justify why. You see one for 30% less? Okay, it's probably a dump and NOT A COMPARABLE. You see one for 20% more than all the others? That doesn't mean you use THAT listing as your comp and boost up the "ROI" you are offering... Maybe the house has a huge lot, golden toilets, etc.
Can someone weigh in on this please? I would love to hear what you use for running your comps and if you encounter this crap often as well.