{"id":5662,"date":"2017-06-21T07:00:18","date_gmt":"2017-06-21T11:00:18","guid":{"rendered":"http:\/\/camerondirect.com\/?p=5662"},"modified":"2020-12-17T18:04:36","modified_gmt":"2020-12-17T18:04:36","slug":"pulling-real-estate-comps","status":"publish","type":"post","link":"https:\/\/realestatewealthnetwork.com\/blog\/pulling-real-estate-comps\/","title":{"rendered":"9 MUST KNOW Factors For Pulling Real Estate Comps You Can Trust"},"content":{"rendered":"

Sooner or later, you\u2019re going to have to pull comparables on the properties you\u2019re considering buying. It\u2019s an important part of every successful Real Estate Investor\u2019s day...<\/p>\n

So let\u2019s define a couple of terms before we dig into this\u2026<\/p>\n

First, the \u201csubject property\u201d is the one you\u2019re considering buying.<\/p>\n

Comparables are your absolute best tool<\/em> to determine the value of the subject property. Real estate agents and investors like you and I will \u201crun or pull comps\u201d, to determine and justify the value of a subject property based on comparable properties that have sold recently within the area.<\/p>\n

In other words, properties that are near by with similar square footage, similar number of bedrooms and bathrooms, possible upgrades and other considerations...<\/p>\n

Now, there are lots<\/em> of factors that help determine if a real estate comp is indeed comparable, and you need to know these factors and apply them each time you look at comps if you want to be able to arrive at an accurate \u201cfair market value\u201d or \u201cafter repair value\u201d.<\/p>\n

See, if you price your subject property based on a property that doesn\u2019t make sense as a comp \u2013 you\u2019ll end up overpricing or underpricing the property and either be outbid by a competitor or worse, pay too much. I don\u2019t need to tell you that you don\u2019t<\/em> want to be in that position.<\/p>\n

So, remember to consider these important factors when running real estate comps\u2026<\/p>\n

Proximity is Priceless<\/strong><\/p>\n

The first thing that makes a property comparable to your subject property is proximity<\/strong>.<\/p>\n

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

As a rule of thumb, real estate comps should be located within 1 mile (even less is better) from the house you\u2019re trying to buy.<\/p>\n

The closer your comp is to your subject property, the more relevant it will be. Ideally, you want your comp to be on the same street.<\/p>\n

A house on the west side of town, for example, won\u2019t be comparable to a house on the east side. It seems like common sense, but it\u2019s definitely worth mentioning.<\/p>\n

Same School Districts<\/strong><\/p>\n

If you can find comps in the same subdivision, same town, AND same school district, you are on the money my friend.<\/p>\n

Pop Quiz<\/strong>: Can a property be in the same school district as the subject BUT not in the same town?<\/p>\n

Answer:<\/strong> Absolutely.<\/p>\n

If you don\u2019t live in a rural area, this is probably a foreign concept to you, but I promise it is possible. So don\u2019t be fooled simply because your subject is in the next town while in the same school district.<\/p>\n

Keeping in mind what I just said about proximity\u2026 finding comps and subjects in the same school district is very important<\/strong>.<\/p>\n

Date of Last Sale<\/strong><\/p>\n

Find out when your real estate comp was last sold\u2026<\/p>\n

If it was sold 2 years ago, it\u2019s not going to be relevant and therefore not a comp, right?<\/p>\n

A good comp will have sold within the last year. A better one will have sold in the last 90 days. The best comp is one that sold in the 30 days. Like proximity\u2026 the more recently it sold the relevant the comp.<\/p>\n

If you find older properties, just disregard them. Finding comps is a process of elimination, and you want to narrow your comps down to the best 1 or 2 \u2013 2 max!<\/p>\n

Size Matters<\/strong><\/p>\n

You\u2019ll want to look at both the house AND lot size along with the comp\u2019s amenities.<\/p>\n

The local Tax Assessor looks at the land and the \u201cimprovements\u201d to the land, ie., the house and assigns an assessed value to each. With the house, the square footage is used as a part of the assessment process and is used by us in the process of determining value.. Ideally you want your comps to be within a difference of 100 square feet or less compared to your subject property. This way they\u2019re so close, no adjustment for the difference in size is warranted.<\/p>\n

I don\u2019t recommend making \u201ceducated\u201d price adjustments for a comparable that doesn\u2019t meet the square footage criteria unless you consult with an experienced Realtor or Appraiser who truly understands the local market. If the comp is much larger or smaller than your subject, throw it out.<\/p>\n

Beds & Baths<\/strong><\/p>\n

Obviously you want your comp and subject to have the same number of bedrooms and bathrooms.<\/p>\n

Again, if they don\u2019t have the exact same and your best comp has 1 more or 1 less bathroom, and you\u2019re not personally and expert on values in your market, seek advice (like above) in making the necessary adjustment.<\/p>\n

Why?<\/p>\n

Because additional bedrooms and bathrooms are valued differently from market to market and then from neighborhood to neighborhood. Again, seek local advice on how much to add or subtract for bedrooms and bathrooms until you, yourself are that local expert.<\/p>\n

Age & Construction<\/strong><\/p>\n

We\u2019re talking aesthetics <\/strong>and bones<\/strong> here...<\/p>\n

\"\"<\/p>\n

If your subject is a brick-front house, find a real estate comp with the same construction type and detail. You can\u2019t (and shouldn\u2019t) compare a vinyl-sided house to a brick house.<\/p>\n

Styles should be the same and age should be as similar as possible. It\u2019s not relevant to compare a house built in the \u201990s to one constructed in the \u201950s.<\/p>\n

It would be cool to compare the two, no doubt, but not reasonable when we\u2019re pulling comps.<\/p>\n

Location, Location, Location<\/strong><\/p>\n

If your comp is located on a busy street next to a strip mall with a Walgreens next to it, it\u2019s certainly not comparable to a house in a subdivision on a quiet cul-de-sac.<\/p>\n

There are buyers for each no doubt, but it\u2019s not reasonable to compare them to one another.<\/p>\n

So, in addition to nearby (proximity) find comps that are located in similar types of areas to your subject.<\/p>\n

Do Pools Always Increase Property Value?<\/strong><\/p>\n

The short answer is no. The long answer begins with that it depends on where you live.<\/p>\n

Owning a property with a pool<\/em><\/strong> (and I\u2019m talking in-ground pools only here; above ground pools are simply bags of water)<\/em> in Florida will almost for sure increase the value and appeal of any house.<\/p>\n

But having a pool in upstate New York will actually decrease the value of a property because of liability and maintenance concerns. So don\u2019t always assume that properties with pools are worth more. Some times they are worth\u2026 less.<\/p>\n

Final Factor<\/strong><\/p>\n

ALWAYS drive by your potential real estate comps, so you can be sure they are \u2013 in fact \u2013 comparable.<\/p>\n

You don\u2019t have to get out of your car, and I would suggest strongly NOT bothering owners by knocking on doors to take a closer look. You\u2019ll know from the street if it\u2019s truly a comp.<\/p>\n

Just do a drive by, and if you\u2019re looking at comps out of state, remember that satellite photos can be exceptionally valuable.<\/p>\n

If you have any questions or comments regarding real estate comps or anything that we have discussed, please feel free to leave those below. I personally monitor and respond to them.<\/p>\n

Best Regards,<\/p>\n

Cam Dunlap<\/p>\n

PS question\u2026 How do you presently pull comps? Share a comment or tip about your method below.<\/p>\n

 <\/p>\n

 <\/p>","protected":false},"excerpt":{"rendered":"

Sooner or later, you\u2019re going to have to pull comparables on the properties you\u2019re considering buying. It\u2019s an important part of every successful Real Estate Investor\u2019s day… So let\u2019s define a couple of terms before we dig into this\u2026 First, the \u201csubject property\u201d is the one you\u2019re considering buying. Comparables are your absolute best tool to determine […]<\/p>\n