How to you determine LTV value?

When you find a motivated seller, how do you fiqure out the value to make an offer without an appraisal? Is it through the comps? It just seems hard to determine the right price. Do you have someone inspect the house while you have it under contract?

I would like to get this information as well. So far I know you can compare it to other properties of similiar square footage, property, rooms, etc. But wat are the other ways to figure it out. I also read you can research recent sales in teh neighborhood to get specfics on the 'hood.

I think if I am THAT interested mb an appraiser may be worth it if I factor them into the cash flow.

whats everyone else think?

You guys ever see the move “money pit”. If you have not I suggest you go out and rent it. It’s a good Tom Hanks movie.

Always have an appraisal and inspection. They can only help. The inspector will point out every problem with the property. You can in turn use that in your negotiation. Provide the appraiser with a copy of the inspection report and they will be able to give you a very accurate “as is” and “subject to” value summary.

Comps are a good way to get a general view of value in the area, but they do not account for the quality of the property. Example:
Your property has mechanicals that are shot. A roof that needs replaced. Leaky plumbing and outdated electric. All the properties in the area that are “comparable in size and design” are selling for $150,000. The comp report will show the value of your subject property as being $150,000. But, those properties have new roofs, plumbing, elctrical, etc. Therefore, your subject property is not nearly worth $150,000. The selller will tell you it is. You can argue the point , but an inspection and appraisal will prove the point.

Just my $0.02


“LTV” stands for “Loan To Value” and is used by lenders to determine the ratio of funds that you are borrowing to the value of the property. LTV has nothing to do with what you should offer on a property.

Everyone (including me) talks about “motivated sellers”. However, this term can be misleading. Just because a person is motivated to sell their house, does not mean that it is a good deal to buy the house. In fact, the vast majority of “motivated sellers” that I talk to CAN NOT lower the price enough to make their house a deal. In a typical call, I’ll here from a seller that purchased their house at retail in the last two or three years. Now, for some reason, they want or need to sell. In most of these situations, these “motivated” sellers badly want to sell you their house, but they owe as much or more than their house is worth. If they’re behind on their payments and facing foreclosure, it may be possible to do a short sale. If their loan is current, almost nothing can be done unless they are willing and able to bring a BIG pile of cash to the closing (most can’t).

What we are really looking for is a “good deal”. I would define a “good deal” as a property which you can buy for 70% or less of the market value. The question is how to determine the market value. You could get an appraisal on every potential property. This is very expensive and is only as accurate as the appraiser (appraisals vary widely) and often depend on the motivation of the appraiser. Have you ever wondered why the appraisals for new homes always seem to come out at exactly the loan value???

You could get comps from a realtor. This is also subject to error and the motivation of the realtor. To get comps, the realtor finds “similar” homes that have sold recently in the same area. Let’s say that the realtor finds 25 houses that have sold recently in the area and will use 3 of these homes for her comps. Since her commission is based on the sales price, which houses do you think she’ll use - the higher priced ones or the lower priced ones???

Now, since both of these methods are prone to error and someone else’s motivation, how will you determine the market value? Simple - go look at 100 houses in your target investment area. Look them over; make notes if you need to. After you’ve looked at all these houses, you’ll be intimately familiar with your area and won’t need an appraiser or realtor to give you their opinion of the value. You’ll KNOW the value and you’ll be subconsciously considering hundreds of factors (configuration, color, smell, neighboring houses, etc!) This is something that simply can NOT be accomplished by using the computer, getting comps from a realtor, or even using an appraiser.

Let’s say that you’ve looked at 100 houses in your target investment area. Someone calls on the phone and says they’ll take $25,000 for a 2 bedrrom, 1 bath house on ELM Street (needs no repairs). Because you’ve looked at 100 houses, you know that most 2 bedroom, 1 bath houses in the area of Elm Street sell for $55,000. Therefore, this MIGHT be a deal and I’d go look at it. If the caller had said their 2 bedroom, 1 bath house on ELM had just been reduced $30,000 to $52,000, I’d know that this was still too high and wouldn’t bother looking at it!

The KEY is to KNOW YOUR MARKET! You can’t do that sitting at a computer.


ok I agree that sounds like a good idea. So should I limit my search to one town? cause Long Island is huge and has a lot of towns in it, it would be impossible to memorize ALL the markets…

Yes, you need to limit your area to a specific location. This is what they call a “farm area.” You what to get to know that area like the back of your hand. When someone says to you, “Hey JP, I’ve got a 3/2 Ranch in your farm area, 1400 sq ft, on 1/2 acre lot, any idea what it would sell for?” You want to be able to repy, “Oh, about $237,000, give or take a grand.”

As you progress, you can expand to other farm areas.


prop.mgr; you’re last two paragraphs are right on target (all newbies need to read this 3 times over!). I do exactly the same thing. I bet I look at 30 or more deals for each one I actually close. I am really picky as I only do deals I know I can make money on.

If it looks like something interesting I go take look; if it looks like retail then forget it.

jp; forget about 'memorizing". just use your brain and pay attention to all the details as you look at all the places. you will see the trends and patterns after awhile. This ain’t quantum physics, folks! You HAVE to know a deal when you see it and jump on it! It you go home to scratch yourself and think about it, it will be gone before you know it.


I’ve read this on here over and over. So as newbie’s we (wife and I) took this advice. We hooked up with a realtor and started to look at houses this week. We’ve seen 5 houses in 2 days and man oh man. “GO SEE 100 HOUSES” I BELIEVE IS A MUST DO for us newbies.

I found it easier to use a realtor to show me the houses in my area. I told her what we wanted to do and she agreed. If your uneasy about going out to meet people use a realtor. I’ve also learned how nasty tenants can be, some didn’t let us in. LOL

my .02