How do I run comps for my house rehabs?
I'm trying to run comps for house rehab projects. I was instructed to run comps like this...
Look for 5 comparable properties. Start my search within 1/4 mile and 3 months, then go out to 1/2 mile and 6 months, then to 1 mile and 12 months. Once I find 5, get the sale price per square foot of each one. Take out the high and low number, then get the average of the remaining 3.
The problems that I have are that sometimes, even if something is within 1/4 mile, the comparable property could be in a completely different neighborhood with much better or worse homes. Or it could be off by 1 or 2 bedrooms or bathrooms. How do I adjust for this? Also, when I rehab a property, it will always have new granite countertops, new floors, probably new cabinets, etc. How do I know the condition of the comparable properties, and how do I adjust for this?
Most Popular Reply
gla=gross living area sf, so 3 or 4 br difference is not important. The larger variance needs to be adjusted. In our area I use $125 sf replacement cost, in your area may be $50 will do. Also lot size and age or condition.
Sold 1 is 1200 sf has 2 bath, subject is 1100 sf 3 bath. (1200-1100)x $50/sf=-$5000 and bath is +$4000 or net -$1000
on sold 1 etc...
The condition of the sold can be estimated by looking at the photos and descriptions. I prefer to budget my rehab cost separately.
Assuming the comp price is $350K the asking price is $300K, I know there can be $50K equity and I factor my rehab cost and closing cost to est what is there left for me after sale.
Redfin commented one home I sold look like a jewel except for the affordable blinds. Yes, I can put on better quality curtains. Control the cost is the key to all renovations. Often you have to do part of renovation to save $. Often there is overrun on cost that there is nothing for seller.