Selling a Property: Identifying Comps in the Area

Posted on January 4, 2014 by

Selling an investment property can be a very challenging process. One of the preliminary considerations in selling the property is what price you should ask. Evaluating the prices of comparable houses in the neighborhood may sometimes solve this problem. However, for those of you connected to REIAComps , the control and feeling of confidence you have over your deals is priceless. Using REIAComps to investigate the prices of houses, which are comparable to your deal, that have recently been sold will provide you a solid value to set the sales price.

Now there are several methods by which you can discover prices of comparable houses in your market area. The first, most costly, but probably reliable method is by hiring a professional home appraiser to conduct an appraisal of the property. Professional appraisers typically evaluate your home and similar homes in the same geographic area and provide you with a report stating the price of your house and comparing its features with other houses that have recently sold in the area. The challenge is these appraised values don’t typically represent the savvy needed for an investor like you. You need not just what a home might sell for, but what you should acquire the dwelling for in the first place. You always want to “make your profit when you buy”.

Secondly, retrieving tax information on houses you think might be comparable in your neighborhood is another method that may be used to identify a selling price. This information can be found in your local tax assessor’s office. After driving to the county office, looking up the assessed value of the home is not necessarily the actual value of the property, but is simply the value the government has placed on the house and land. The assessed value is used to compute the amount of property taxes that the homeowner must pay every year. So, while this is a source of data, which is easily accessed through REIAComps , you will want to be very cautious or even avoid using assessed data, except for tax purposes all together.

Next, another useful method for identifying comparable homes in your neighborhood is to simply look around at the houses that are for sale near you. Many houses on the real estate market contain information tubes that will outline the features of the home and list the price being asked for the home. Gathering these information sheets from homes in your area can be a useful tool in determining which houses are comparable to your own and the prices for which they are selling. This method is actual more preferable than assessed data.

You might also consult a real estate agent to help find comparable homes in your area before selling your own home. Some real estate agents might be willing to assist you in conducting this investigation when you express your desires to them. Just remember, real estate agents are driven to earn a commission on the sale of a dwelling. There is no incentive to sell low. Plus, be very careful. Most agents will offer data on the houses which were listed by an agent and sold on the MLS. They will typically always miss foreclosed property sales, trust sales, and certainly For Sale by Owner. Each of these alternative transactions impacts the property values in a neighborhood. Fortunately, REIAComps offers data on all the transactions in a market area, not just the MLS agent listed dwellings.

So while you may consider using an appraiser, county assessed data or even a real estate agent, always remember you need two values. Acquisition and After Repair Value (ARV). The power in using REIAComps to calculate the value of your deals is like having an investing appraiser at your side. Having control and feeling confident in determining value strengthens your real estate business. Remember to always know the acquisition value as well as the after repair value (ARV). As an investor, you want to have a solid idea of not just the value of a dwelling. Because you are proactive in your business acumen thinking of the next individual in the transaction, it is vital to demonstrate there is an equity position for the buyer.

Avoid the cost of an appraiser and the guessing game of assessed values or a realtor CRM. Use your REIAComps to determine the best acquisition and ARV for every deal you look at. Don’t for one moment let someone tell you the value. Let REIAComps show you for yourself.

Mark JacksonMark Jackson is an appraiser, real estate investor and property valuation specialist who teaches others to get more out of their real estate investing business. In 1999, Mark founded an appraisal company and soon found his true gift was analyzing property values for real estate investors. Since 2000, has closed millions of dollars’ worth of his own domestic and international real estate transactions. Mark’s passions are: faith, family, golf and real estate.

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