How Do I Know What A Property Is Worth?
Image from Pixabay
By Tamera Aragon
In considering the price to pay for a property, the first step you must take is to know the ARV (After Repair Value), of a property. Of course there are other costs to consider in buying and selling but it all starts here…The value of the property.
I know I get this question a lot…
Question: “How do I value the property I am interested in?”
I want to start by sharing that comps, or comparables, are regarded as the single-best tool in determining a home’s value. Comps will compare criteria from recently-sold properties in a neighborhood, such as sale price, age of house, size, and square footage and come up with an average value based on these elements.
I like to look at the last 90 days SOLDS and use ½ mile radius at most when considering comps around a property I am looking to value.
On a side note, for easy online access to the information I am sharing here anytime, go to this website where you will find a ton of other FREE tools and resources catering to real estate investors.
So… back to the original question…
Answer: COMPS! You need to use comps to come up with value. This is what the banks use to come up with how much they loan. This is what appraisers use. This is the common way to come up with base valuation of property.
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2nd Question: So you next question I get is, “Where do I find good comps?
Some of you reading this might be a Realtor and have easy access to comps.
However, others who are not Realtors, finding good comps is not so easy. And I know I hated to bother my Realtor to have to look up comps when I am making 20+ offers a day.
2nd Answer: So here ya go…here are some free resources that will help you in getting started in valuing a property using some simple online tools.
NOTE: Most of these sites include the value of a mortgage when it goes into Foreclosure as a sale, which can make these numbers skewed from facts. Be aware of this. However, these are good starting points and can be used in your initial evaluation.
- Most popular – Zillow – www.Zillow.com who owns the term, “ZESTIMATE”. You just type in the address and their value comes up. If you want to learn how they come up with their Zestimate, go here: www.zillow.com/wikipages/What-is-a-Zestimate
- NEW – In Beta Form- Find Comps Now – www.FindCompsNow.com Seems to utilize Zillow yet lists the properties used to come up with estimate but adds some interesting features like separating out the cash buyers’ purchases from those who were purchased with mortgages.
- Offers Comps plus Property Operating Data Tool – Finest Expert
- Connected to most MLS Services – www.Realtor.com
- Most Comprehensive – Redfin – www.redfin.com Study showed they had 100% of all homes listed by compared to others.
- Easy Sort feature to weed out comps that don’t apply (Foreclosures, too old, too far).Trulia – www.Trulia.com Do not just take the value shown.
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Follow these Instructions to get the best free comps from Trulia.
- Go to: www.Trulia.com
- Type in the address, city, state and if possible, the zip code for the property you need to run comps.
- Wait for small box on right to pop up and click on the words “view details” inside that box
- On this page look for tabs about 1” down – one says comparables – click on that tab
- On this page ignore the comps you see and scroll to the very bottom of the screen and click on the words view more comparables
- On this page you will see a tab for “Solds” and a tab for “For Sales”. These are the comps you want
- Note: This site also takes into account properties the bank has taken back at full price owed because they buy these on the court steps. Therefore, ignore the property prices that are out of line with the majority.
- Put properties in order of proximity by clicking the “proximity” tab and then clicking the arrow. This puts properties in order of how close they are to your
- Use the Per Square Foot price located on the right side.
- Average the Per Square Foot price by adding up those located a mile or less from the property and averaging the number by how many properties you added up. Example:
- 10 properties added up to be $1000.00
- Divide 10 properties by the $1000.00 total and that means the property you are researching is worth $100 psf (per square foot)
- Multiply this per square foot price by the square footage of your subject property.
Image from Pixabay
Again, there are many other factors to consider when looking to buy a property for investment services, (More on this in future blog posts.)
Are you interested in real estate investing?
Be sure to click on the link below to take advantage of many that I use in my REI biz.
On a side note, for easy online access to the information I am sharing here anytime, go to this website where you will find a ton of other FREE tools and resources catering to real estate investors.
If you have any other ideas, experiences or questions about using and finding comps, please leave me a comment below! It’s great to have the interaction and appreciate hearing from you.
TAMERA ARAGON
Tamera Aragon is a professional online entrepreneur and has bought and sold over 300 properties, establishing her as an expert in the real estate investing field. Since 2003, she has purchased over 10 million dollars in real estate and currently holds properties all over the world. Tamera’s focus is on the booming Foreclosure market, buying Pre-foreclosures, REOs and Short Sales. Tamera who is a noted Author, Success Trainer, Speaker & Coach, shows her passion for helping others with the 17 websites she has created and several specialized products to support fellow investors throughout the world. When Tamara is not busy running her website, she is very involved with her Fiji joint ventures and investments. Tamera Aragon is one of the few trainers and coaches who is really “doing it” successfully in today’s market. Tamera’s experience has earned her a solid reputation in the industry as well as the respect and friendship of many of the top national real estate investment and internet marketing experts. Tamera Aragon believes her success has garnered her the financial freedom to fully enjoy her marriage and spend quality time with her children.
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