{"id":5280,"date":"2016-05-06T17:42:33","date_gmt":"2016-05-06T17:42:33","guid":{"rendered":"http:\/\/camerondirect.com\/?p=5280"},"modified":"2021-10-27T14:26:23","modified_gmt":"2021-10-27T14:26:23","slug":"property-value-estimate","status":"publish","type":"post","link":"https:\/\/realestatewealthnetwork.com\/blog\/property-value-estimate\/","title":{"rendered":"Property Value Estimate Guide: 4 Key Factors So You Never Overpay"},"content":{"rendered":"

(The Simple Way to Appraise Houses Quickly)<\/h2>\n

There\u2019s incredible power in simplifying\u2026<\/p>\n

Doing your own property value estimate will save you time and money.<\/p>\n

It seems daunting to estimate the value of hundreds of properties, so most investors stop right there.<\/p>\n

And in order to be a pro wholesaler\u2026 you have to master this. If you are 1% off\u2026 that\u2019s $1,000 on a $100,000 house. If you are 10% off\u2026 that $10,000.<\/p>\n

Not only will you make less mistakes, you will save time\u2026<\/p>\n

When I got started I made the same mistakes that most novice investors make and one of the biggest mistakes I made was spending too much time determining the after-repair value of each house.<\/p>\n

I remember one time I brought my sleeping bag, a picnic basket, and some tunes and spent the evening picking the house apart to find my house value.<\/p>\n

I analyzed every aspect of the deal imaginable\u2026 and guess what?...<\/p>\n

I still wasn\u2019t perfect to the dollar.<\/p>\n

There is an albeit simple art & a science you\u2019ll need to use when it\u2019s time to find your property value, but even if you were the best in the business\u2026  you will not be exactly right, the majority of the time.<\/p>\n

It always boils down to\u2026 what a buyer is willing to pay for a property.<\/p>\n

You can\u2019t predict with precision how much a buyer is going to be willing to pay for a house\u2026 because you are analyzing months in advance\u2026 and the investor who buys the house from you may have a wildly different vision than you (and the comps that are available to you).<\/p>\n

The Trick Is To Do The Best You Can In The Quickest Amount Of Time Possible.<\/h2>\n

Find houses in the area that are comparable.<\/p>\n

Look for houses in excellent condition, as close as possible, that have sold recently, and share the same features and benefits.<\/p>\n

This article is about estimating home value on starter homes. There are lots of entry level houses in every market and finding comparable homes should not be very difficult.<\/p>\n

If you are not an appraiser, don\u2019t worry. They have to give every detail in large part, because they are performing this service for a national bank or for a home buyer who is using bank financing. The lender wants to know everything they can about the house but they do not have the advantage you have of being in the local market.<\/p>\n

They don\u2019t know the area, they can\u2019t drive by the house, they can\u2019t walk inside the house, they can\u2019t measure the square footage\u2026 so they need a licensed and regulated professional to tell them all of this information.<\/p>\n

The bank will certainly not trust the buyer\u2019s opinion of value, and since brokers are commission based, the bank doesn\u2019t even know if they can trust them.<\/p>\n

So while an appraiser\u2019s real estate valuation may be more accurate than yours\u2026 all you should care about is the after-repair value so that you can make the right offer.<\/p>\n

Getting the house appraised is unnecessary and a waste of a few hundred dollars if all you\u2019re trying to do is find out the ARV.<\/p>\n

Your rehab investor buyer will come up with his\/her own opinion of value, their broker will come up with his\/her own opinion of value, the buyer who eventually moves in will have their own opinion, and the appraiser hired by the buyer\u2019s lender will give their opinion too.<\/p>\n

There are a lot of opinions being tossed around here and who knows\u2026  yours may be the most accurate by the time it sells.<\/p>\n

You are not going for perfection here\u2026 you are going for \u201cwhat you realistically think a retail buyer would pay for it\u201d, so you can work your numbers and make an doffer that allows you to make money as a wholesaler.<\/p>\n

Your time is valuable and you need to act that way.<\/p>\n

Don\u2019t use the time-intensive method that novice investors use (analyzing every<\/p>\n

detail). Instead use the method below, which took me decades to hone in on and perfect.<\/p>\n

Condition<\/h2>\n

Your buyer (the rehabber) is most likely going to do a major renovation. By the time he\/she is finished\u2026 the house will be like new.<\/p>\n

At my live events, I ask the audience for participation and when I survey the appraisers, they say that they usually calculate house value 10% higher for a fully rehabbed house than a house in average used condition.<\/p>\n

If average used condition houses are selling for $100,000 in your area then a freshly rehabbed house in excellent condition should sell for $110,000\u2026 you need to know that.<\/p>\n

Make your offer based on the future value being $110,000 not $100,000 (like novice investors do). You will lose deals if your offers are TOO low.<\/p>\n

Proximity<\/h2>\n

How close is the comp to the subject property?<\/p>\n

You want it to be within 1 mile for sure (unless you are in a rural area). Ideally, you would find a comp in excellent condition on the same street. But, if you find a house in excellent condition that is in the same subdivision, that works well too.<\/p>\n

Here is my rule of thumb:<\/h3>\n

\"Find<\/span><\/p>\n

Recency of Sale<\/h2>\n

A house that has sold within the last 30 days is more relevant than a house that sold 1 year ago. I hope this hits you as common sense.<\/p>\n

Imagine you are shopping for a new computer\u2026 would you be willing to pay as much for last year\u2019s model as this years?<\/p>\n

In Real Estate, values appreciate and depreciate. Depending on which part of the cycle you are in, the value may be higher or lower than a house that sold 1 year ago. You want to use the most recent comps possible.<\/p>\n

Here is my rule of thumb:<\/h3>\n

\"Master<\/p>\n

Size & Amenities<\/h2>\n

Have you ever heard the saying \u201clocation, location, location\u201d?<\/p>\n

This is where that applies.<\/p>\n

If the subject property that you are considering making an offer on is on the lake and the comp you see is in a bad area\u2026 they are not comparable.<\/p>\n

If the subject is on a busy street and you are looking at a comp in a tree-lined neighborhood\u2026 they are not comparable.<\/p>\n

Look for houses that are in a similar quality area and similar in size:<\/p>\n