I’m feeling pretty good about things these last few days about my probate hunt. I’ve been able to get a handful of calls this past week and one Bruce and I made an offer on for $120k but the owner got another offer for $150k so he is going to take that one obviously.
I just got another call today from a guy who had hung onto my letter from my first ever mailing back in December. He got my letter and follow up postcard back then and held onto them, waiting until he was ready to sell. He lives in Virginia and has already been up to clean the house a couple times but it’s getting to be a real pain according to him. His self comping of the house got him thinking about $300k, but he sounded flexible.
I ran comps for this house and got 280k on the low end, the high end is about 320k. From talking with the guy I’m figuring about 40k in repairs (update kitchen and bath and carpet and paint). So using the 70% guideline I’d end up offering…..
280k (ARV) * .70 – 40k (repairs) – 20k(my part) = 136k Offer
As usual I handed this one off to Bruce and I’m going to compare what he offers with how I figured it.
How I came up with my Comps
One of the biggest questions I have is how to properly come up with comps. It sounds easy enough, but sometimes the easy things bog us down. This is my crude method with MLS Access.
Step #1: Find all exact house style, bed and bath matches
I like to get this for the entire town just so I get an overall view of pricing in the town. With in the gsmls I’m able to map out all of the comps and view exactly where they are located. This helps me determine if any particular pocket of town holds more (or less) value then the others.
Step #2: Go to google maps and Bing Maps and find the surrounding streets to the desired property
I really want to pin point where the sellers house. This will allow me to build up a radius and only use the comps that fall with in that radius as my true comps. Since I usually don’t know what the surrounding streets are, this method helps me out immensely. Another great thing about bing and google maps is that you can zoom so far down that you can see the houses. With Google Street View you can almost avoid going to see the house all together.
Step #3: Take a look at the comps for an additional (or fewer) bedroom and/or bath
This will give me an even better idea of the potential of the house. Lets say if adding one additional bathroom could greatly increase the price of the house (with the lead I was talking about above, the comps showed about a 50 to 75k price increase).
Step #4: Take the 3 best and use the lowest priced one for my ARV
I use the lowest priced home in order to play it safe, it’s the worst case scenario method. It’s a price I’m positive I can sell the house for after fixing it up.
Some other tricks I use
- Look at the active homes to get an idea of what other agents think is a good price in the current market.
- If you can’t find any comparable beds and baths you’ll have to adjust the price. Say each bedroom ads 20k to a house, if you can only find 4/2 comps for a 3/2 you’ll have to adjust the price for the one less bedroom.
I’m just making this stuff up as I go, so I can guarantee you that there is a better way to pull comps from the MLS. In fact I plan on taking the $15 course that the association offers. If I learn one good trick then it’ll be worth it.
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