compare with COMPS & also check web sites like ZILLOW.COM, HOMEGAIN.COM, they can also give you an idea of the FMV of a home, i would also get the opinion of an APPRAISER if your REALLY interested in the property, YOUR HERO, SULLY.
The best way is to get comps. from a realtor. In todays market you will want the most recently sold properties. With all the comps. figure what the cost of square foot is with each comp. get an average and use that average number to multiply by the square footage of the property. I will go through an expample for you.
Propety your interested in 3 Bd 2 Ba 1200 SQ feet.
Comp. #1 3 Bd 2 Ba 1150 sq feet sold for 125,000 = 108.7 per square foot.
Comp. #2 3 Bd 2 Ba 1050 sq feet sold for 120,000 = 114.29 per square foot.
Comp. #3 3 Bd 2 Ba 1250 sq feet sold for 132,000 = 105.6 per square foot.
Average of comps is 109.53
1200 * 109.53 = 131,436
That would be your FMV
The more comps. you get the more accuarate your calculations will be.
__________________
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
that usually happens in a perfect senario, what about when the COMPs you have aren't the best COMPs, but you have to deal with it, and instead of having the bedrooms and baths ALL match like your above example, you have like, 3BR,1.5BA,1321 sq.ft., then what? how do you compensate for the half bath not being part of the COMP? in other words, how much would i deduct? SULLY
that usually happens in a perfect senario, what about when the COMPs you have aren't the best COMPs, but you have to deal with it, and instead of having the bedrooms and baths ALL match like your above example, you have like, 3BR,1.5BA,1321 sq.ft., then what? how do you compensate for the half bath not being part of the COMP? in other words, how much would i deduct? SULLY
The square footage is the easiest. Just do the comp on a price per square foot basis.
The bath is harder. Appraisers actually do have specific amounts they deduct. I would say in this case not more than a few thousand.
As a Realtor, I do alot of comps. In todays market there are many REO's on the MLS, which are used to determine value. These have been discounted and may be distressed. Try to get the listing information, so that you can tell the condition of the properties you are comparing. Your value after repairs may be more than the comps show. Be careful.
Al
__________________
"NOW GO FIND A DEAL"
Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
Watch your character, it becomes your destiny.
That' a tough on Sully. Although your example does have 1/2 a bath less than the other ones in the previous example, it does have more square footage that should off set slightly.
If the square footage were the same, I still wouldn't still wouldn't deduct it by that much (maybe a couple thousand dollars). If your comps are done right, they should all still be in the same neighborhood and the seperation in prices shouldn't be that drastic.
Eric example is the best if available. I would rather have the true comps from the MLS and work with what I have, than to take my chances on blowing the whole thing based on 1 item that isn't listed. I have used the little websites that are out there as well the assessed value. Nothing will ever be as good as the MLS comps. If you are having a problem with getting them from an agent, run by a title company, they will print them for you.
__________________
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
The National Assoc. of Realtors have tag lines running in their latest ads "Real Estate is local - Ask a Realtor."
Few if anyone else could place a price on something in the time that a real estate could. All county and other data that the lay people have are not updated for nearly 2 months after a transaction.
Comps are King but let us remember that we do have have a difference in comps and there is something that we want to incorporate into the equation.
That is by explanation: We have a comp for 150k but it was on the market for 180 days.
2nd comp says 140k 9 days
So we have 2 prices but the high took longer to sell. The low sold quicker. What is our buyer interested in selling fast or not a big deal if it takes longer..
The comps from the MLS are the very best!
This is the #1 thing that aggravates sellers. They think because they sank X amount of $$ into a place that they raised its value by double or triple that much. Don't let their "opinions" get to you. The house is ONLY worth what both buyer and seller agree to do a deal on it for. In the murky darkness of what that "magic" number is, accurate comps on recently sold similar properties is like a lantern, with square footage being the brightest spot. Remember to compare apples to apples, not apples to pumpkins. Just because the Joneses have a pool and no one else does, that doesn't make the seller's numbers right, etc. Agents always have access to the most accurate and recent data, and it appears only expert investors in hot markets have the tools and knowledge to be able to pull the same info on their own without an agent. Keep that in mind, best of luck to you...
__________________
Paul: "I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when my fear is gone I will turn and face fear's path, and only I will remain."
Duke Leto: "I'll miss the sea, but a person needs new experiences. They jar something deep inside, allowing him to grow. Without change something sleeps inside us, and seldom awakens. The sleeper must awaken." - "Dune."
Conditions of Sale -- Did the comparable recently transact under conditions (e.g. -- arms length, distress sale, estate settlement) which are consistent with the standard of value under which the appraisal is being performed?
Financing Conditions -- Was the comparable transaction influenced by non-market or other favorable (or even unfavorable) financing terms? For example, if the comparable sold with a below-market interest rate provided by the seller, and if the standard of value (e.g. -- market value) assumes no such abnormal financing, then the appraiser may need to adjust the comparable price by an amount equal to the estimated impact of the favorable financing.
Market Conditions -- This is often referred to as the time adjustment and accounts for changing prices over time.
Locational Comparability -- Are the comparable and the subject property influenced by the same locational characteristics? For example, even two houses in the same neighborhood may have different views which cause one to be more valuable than the other.
Physical Comparability -- This includes such factors as size, condition, quality, and age.
Randy Bailiff
Dean Graziosi Life and Investment Coach
This approach estimates the construction cost of the improvements, as if new, and deducts factors for depreciation, disutility, and external obsolescence. To this is added the value of the site and site improvements. The result is the value via the cost approach. Comparable data is used to estimate the site value, and may also be useful in estimating construction costs and other factors. In practice, however, most appraisers use standard costing services for cost estimates and use an age-life method for depreciation.
The cost approach was historically prepared as a part of most commercial real estate appraisals. However, the compunction to include the cost approach (when it was not relevant) has dissipated over the last 20 years.
The principle of substitution is the technical basis for employing the cost approach. According to the principal of substitution, a prudent buyer would not pay more than the cost to build a like property. In other words one would not spend $2,000,000 to purchase a new apartment complex if they could build it for 1,500,000.
The cost approach value is the sum of the market value of the land, depreciated replacement cost and entrepreneurial effort. Land is typically Valued using the sales comparison approach. The replacement cost is the cost to build a building of the same quality and functional utility as the subject property. (Reproduction cost is the cost to build an exact duplicate. This approach is used occasionally for old buildings built using materials and or types of craftsmanship not currently used.)
External obsolescence occurs when circumstances outside the subject property's boundaries negatively impact its value. For example, an office building in New York would suffer from external obsolescence if Manhattan office occupancy fell from 93% to 75%. A mansion built next to a slaughter-house is another example of external obsolescence.
Entrepreneurial profit is the amount of compensation necessary to induce someone to organize the site, investors, debt, architecture, construction and leasing necessary to plan and build a property. The appropriate amount of entrepreneurial profit depends on factors such as competition, the difficulty of the project, market conditions and the wisdom of the developers plan. In some cases external or functional obsolescence prohibit entrepreneurial profit.
Following is a summary of the cost approach:
Market Value of Land + Replacement cost new of improvements - All forms of depreciation + Entrepreneurial Profit = Market Value via the Cost Approach
Randy Bailiff
Dean Graziosi Life and Investment Coach
Happy Prospering! ~Kat, Liberty Residential Investment Acquisitions
• "To every thing there is a season, & a time to every purpose..." ~Ecclesiastes 3:1-8
• "Inaction breeds doubt and fear. Action breeds confidence and courage. If you want to conquer fear, do not sit home and think about it. Go out and get busy!" ~Dale Carnegie
• "Begin, be bold, and venture to be wise." ~Horace
• "Never, never, never give up." ~Winston Churchill
• "Whatever you do, or dream you can, begin it. Boldness has genius and power and magic in it." ~Johann Wolfgang von Goethe
Offline
They can give you the most up-to-date comps on a home/area
Anita
******************************************
TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
compare with COMPS & also check web sites like ZILLOW.COM, HOMEGAIN.COM, they can also give you an idea of the FMV of a home, i would also get the opinion of an APPRAISER if your REALLY interested in the property, YOUR HERO, SULLY.
YOUR HERO, SULLY
The best way is to get comps. from a realtor. In todays market you will want the most recently sold properties. With all the comps. figure what the cost of square foot is with each comp. get an average and use that average number to multiply by the square footage of the property. I will go through an expample for you.
Propety your interested in 3 Bd 2 Ba 1200 SQ feet.
Comp. #1 3 Bd 2 Ba 1150 sq feet sold for 125,000 = 108.7 per square foot.
Comp. #2 3 Bd 2 Ba 1050 sq feet sold for 120,000 = 114.29 per square foot.
Comp. #3 3 Bd 2 Ba 1250 sq feet sold for 132,000 = 105.6 per square foot.
Average of comps is 109.53
1200 * 109.53 = 131,436
That would be your FMV
The more comps. you get the more accuarate your calculations will be.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
That was a great example.
Anita
******************************************
TWITTER - anitarny / FACEBOOK - anitarny
"FAILURE IS NOT AN OPTION"
that usually happens in a perfect senario, what about when the COMPs you have aren't the best COMPs, but you have to deal with it, and instead of having the bedrooms and baths ALL match like your above example, you have like, 3BR,1.5BA,1321 sq.ft., then what? how do you compensate for the half bath not being part of the COMP? in other words, how much would i deduct?
SULLY
YOUR HERO, SULLY
thank you so much for all of your help. I think I am on the right track now.
The square footage is the easiest. Just do the comp on a price per square foot basis.
The bath is harder. Appraisers actually do have specific amounts they deduct. I would say in this case not more than a few thousand.
As a Realtor, I do alot of comps. In todays market there are many REO's on the MLS, which are used to determine value. These have been discounted and may be distressed. Try to get the listing information, so that you can tell the condition of the properties you are comparing. Your value after repairs may be more than the comps show. Be careful.
Al
"NOW GO FIND A DEAL"
Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
Watch your character, it becomes your destiny.
Frank Outlaw
That' a tough on Sully. Although your example does have 1/2 a bath less than the other ones in the previous example, it does have more square footage that should off set slightly.
If the square footage were the same, I still wouldn't still wouldn't deduct it by that much (maybe a couple thousand dollars). If your comps are done right, they should all still be in the same neighborhood and the seperation in prices shouldn't be that drastic.
Eric example is the best if available. I would rather have the true comps from the MLS and work with what I have, than to take my chances on blowing the whole thing based on 1 item that isn't listed. I have used the little websites that are out there as well the assessed value. Nothing will ever be as good as the MLS comps. If you are having a problem with getting them from an agent, run by a title company, they will print them for you.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
The National Assoc. of Realtors have tag lines running in their latest ads "Real Estate is local - Ask a Realtor."
Few if anyone else could place a price on something in the time that a real estate could. All county and other data that the lay people have are not updated for nearly 2 months after a transaction.
Comps are King but let us remember that we do have have a difference in comps and there is something that we want to incorporate into the equation.
That is by explanation: We have a comp for 150k but it was on the market for 180 days.
2nd comp says 140k 9 days
So we have 2 prices but the high took longer to sell. The low sold quicker. What is our buyer interested in selling fast or not a big deal if it takes longer..
The comps from the MLS are the very best!
Randy Bailiff
Dean Graziosi Success Coach
Very good example, clear and to the point. I would love to work with you but am at the bird dog phase and very excited!!
Lynn
Here's to a new life!
This is the #1 thing that aggravates sellers. They think because they sank X amount of $$ into a place that they raised its value by double or triple that much. Don't let their "opinions" get to you. The house is ONLY worth what both buyer and seller agree to do a deal on it for. In the murky darkness of what that "magic" number is, accurate comps on recently sold similar properties is like a lantern, with square footage being the brightest spot. Remember to compare apples to apples, not apples to pumpkins. Just because the Joneses have a pool and no one else does, that doesn't make the seller's numbers right, etc. Agents always have access to the most accurate and recent data, and it appears only expert investors in hot markets have the tools and knowledge to be able to pull the same info on their own without an agent. Keep that in mind, best of luck to you...
Paul: "I must not fear. Fear is the mind-killer. Fear is the little-death that brings total obliteration. I will face my fear. I will permit it to pass over me and through me. And when my fear is gone I will turn and face fear's path, and only I will remain."
Duke Leto: "I'll miss the sea, but a person needs new experiences. They jar something deep inside, allowing him to grow. Without change something sleeps inside us, and seldom awakens. The sleeper must awaken." - "Dune."
Conditions of Sale -- Did the comparable recently transact under conditions (e.g. -- arms length, distress sale, estate settlement) which are consistent with the standard of value under which the appraisal is being performed?
Financing Conditions -- Was the comparable transaction influenced by non-market or other favorable (or even unfavorable) financing terms? For example, if the comparable sold with a below-market interest rate provided by the seller, and if the standard of value (e.g. -- market value) assumes no such abnormal financing, then the appraiser may need to adjust the comparable price by an amount equal to the estimated impact of the favorable financing.
Market Conditions -- This is often referred to as the time adjustment and accounts for changing prices over time.
Locational Comparability -- Are the comparable and the subject property influenced by the same locational characteristics? For example, even two houses in the same neighborhood may have different views which cause one to be more valuable than the other.
Physical Comparability -- This includes such factors as size, condition, quality, and age.
Randy Bailiff
Dean Graziosi Life and Investment Coach
This approach estimates the construction cost of the improvements, as if new, and deducts factors for depreciation, disutility, and external obsolescence. To this is added the value of the site and site improvements. The result is the value via the cost approach. Comparable data is used to estimate the site value, and may also be useful in estimating construction costs and other factors. In practice, however, most appraisers use standard costing services for cost estimates and use an age-life method for depreciation.
The cost approach was historically prepared as a part of most commercial real estate appraisals. However, the compunction to include the cost approach (when it was not relevant) has dissipated over the last 20 years.
The principle of substitution is the technical basis for employing the cost approach. According to the principal of substitution, a prudent buyer would not pay more than the cost to build a like property. In other words one would not spend $2,000,000 to purchase a new apartment complex if they could build it for 1,500,000.
The cost approach value is the sum of the market value of the land, depreciated replacement cost and entrepreneurial effort. Land is typically Valued using the sales comparison approach. The replacement cost is the cost to build a building of the same quality and functional utility as the subject property. (Reproduction cost is the cost to build an exact duplicate. This approach is used occasionally for old buildings built using materials and or types of craftsmanship not currently used.)
External obsolescence occurs when circumstances outside the subject property's boundaries negatively impact its value. For example, an office building in New York would suffer from external obsolescence if Manhattan office occupancy fell from 93% to 75%. A mansion built next to a slaughter-house is another example of external obsolescence.
Entrepreneurial profit is the amount of compensation necessary to induce someone to organize the site, investors, debt, architecture, construction and leasing necessary to plan and build a property. The appropriate amount of entrepreneurial profit depends on factors such as competition, the difficulty of the project, market conditions and the wisdom of the developers plan. In some cases external or functional obsolescence prohibit entrepreneurial profit.
Following is a summary of the cost approach:
Market Value of Land + Replacement cost new of improvements - All forms of depreciation + Entrepreneurial Profit = Market Value via the Cost Approach
Randy Bailiff
Dean Graziosi Life and Investment Coach
Baffling and brilliant, Randy! Thank you!
Happy Prospering! ~Kat, Liberty Residential Investment Acquisitions
• "To every thing there is a season, & a time to every purpose..." ~Ecclesiastes 3:1-8
• "Inaction breeds doubt and fear. Action breeds confidence and courage. If you want to conquer fear, do not sit home and think about it. Go out and get busy!" ~Dale Carnegie
• "Begin, be bold, and venture to be wise." ~Horace
• "Never, never, never give up." ~Winston Churchill
• "Whatever you do, or dream you can, begin it. Boldness has genius and power and magic in it." ~Johann Wolfgang von Goethe
!
great info here