I have recently signed up to a website that gives me a complete property report with comparable sales included.
My question is what do you look for on these reports as in comparables to determine what you should offer for a property after looking at repairs?
Comparables are the MOST that property should cost at retail. Since we are looking for properties at wholesale or dealer costs, you figure how much it will cost to get the property on the market, which should include acquisition costs, fix up, holding costs, permits everything. We will call all that for sakes of example fix up (example fixup $20,000) Subtract that from the comparables (example comp $100,000- fixup$20,000= true cost$80,000). Subtract the amount you need to earn from that deal (true cost$80,000 – profit $20,000= $60,000) You can offer $60,000 for the property.
The advantage of using comparable sales is that instead of making your calculation on asking or listed prices, you are making your decision based on real sales…what the property is most likely going to sell for. I have one of those subscriptions and I suggest you actually put eyes on the houses that it calls up for comparables. Houses just 2 streets over can sell for a whole lot more or less and you need to see it to make sure you are comparing apples to apples.
Ok thanks! i appreciate your response. I have a property where the Total Assessor Market Value is $94,200.
The last sales price was 155k.
And the comps that are coming back are like.
.44mi 85,000, .42mi 139,000, .4mi 162,000, .4mi 207,000
The house need minor repairs etc.
So… should i be offering based on the assessor market value?
In most places, the assessed value has absolutely correlation to any sort of reality.
Here, I don’t even usually look at them – except for a good laugh!
My last three properties:
(1) Tax Assessment: $47,400 Last Appraisal: $65,000
(2) Tax Assessment: $45,500 Last appraisal: $67,200
(3) Tax Assessment: $49,000, Last appraisal: $71,300
On average, they’re about 43.4% low – no correlation to reality. It would be nice if you found a seller that will believe it, I suppose.
Keith
Always throw out the high (a person that was in love with the house) and the low (a distressed sale) and average the others. I would like at least 3 comparables that look and feel like the one you have. But using the 2 you have, it looks like your price may be a good one.
Also make sure that these houses are in the same subdivision and section of that subdivision (Lakewood section 7) on the property description because section 7 and section 8 may be significant.
Ok so im pretty much not going to really pay that much attention to the tax assessors market value.
Im going to look at the comps in relation to how they match the subject property? Minus repairs and my profit and make my offer from there.
Roger that…it’s not exactly rocket science and you’ll be relatively close.
Keith