OfflineI am trying to figure out my offer amount on a property. My REA gave me 6 COMPS in that area that SOLD recently. I ran the 6 for price per square foot. Got rid of the highest, and the lowest. The average price per square foot for the comps is $146/Ft2.
Now I ran the 146 X the square footage of the property and it came out to 316,833. They are only asking 168k for the house.
Did I miscalculate? Is this the correct way to find market value?
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Doin DEALS !
Lewis,
Since I've only done this once, here's what I did.
I took the comps from my REA and made sure that they were all like in square footage & bed/bath. Once I new they were comparable that way then I added all the sale prices & took the average as the FMV on the house I was looking at.
Don't know if this helps, but I'm sure the answer is in this forum somewhere.
Jean
Jean Maestre
The Maestre Property Group, LLC
"Our deepest fear is NOT that we are inadequate, Our deepest fear is that we are powerful beyond measure"
"Do or do not, there is no try"
"Every adversity, every failure, every heartache, carries with it the seeds of an equal or greater benefit"
How do I know if the comps the REA is pulling are comparable? This house is a cape cod, so they pulled only capes, Even though they are not the same square feet or bed/bath... does this matter??
Other houses in this town are selling for a lot less than 145 a square foot...
Doin DEALS !
Hi Lewis,
Here is what I do, but first let me say-- go back to Dean's books, and the forums associated with calculating your offers.
The comps your REA gave you should have a distance from the subject property on them. Start there. Also, if subdivisions apply, your REA can give you comps within the subdivision. Then compare the age of the houses with your subject..
use the ones closest to your property in age, sf, and location and calc the sf like you did.
Again, going back to our lessons from the books and programs-- calculate like this:
If your comp is $316,000 then take that number and multiply by .85 (this takes 15% off the top for crap costs), then determine the repair costs and minus that, then determine your profit (and your buyers profit) and minus that. That should be your offer. If that number is higher than the asking price-- great!!!! More profit or money to fix the house. If it is lower, then determine if you feel all your numbers are good and if you feel your offer may get accepted; find out why it is priced so well; what's the motivating factor, and go for it!
Re: wholesale vs retail.... if there are a lot of REO's in the area, ask the REA to tell you which comps were REOs and which were Retail sales. The REO's are the wholesale comps (more in the arena you want to buy in) and the Retail are more a picture of ARV (after repair value).
Hope that helps--
Tina
Never, Never, Never Quit, N3Q
"Nothing happens until you place an offer."
"Skip Deal #1, go straight to Deal #2; it's so much easier."
"There is nothing so useless as doing efficiently that which should not be done at all." — Peter F. Drucker... so, "Don't sweat the small stuff." -R.Carlson. "The greatest mistake you can make in life is to be continually fearing you will make one."~E.Hubbard, The Note Book, 1927...so, Do it for the right reason and "Do it with a headache!" - Dean Graziosi, Weekly Wisdom #176
My comps where all similar in neighborhood and construction style. BUT were all 1300-1700 square feet. This house is 2158, so when I did the math its obviously a MUCH higher value for this house. Is this a realatively acurate way of doing it?
Doin DEALS !
Your comps also should be within 1/2 mile of the prop (if possible) and sold within the last 60-90 days.
Karen
"You're never too old to be what you were meant to be!"
www.deangraziosi.com/real-estate-forums/investing-journals/59128/day-for...
"Shining Like a Star & Dancing on Sunshine"
"Shoot for the moon! Even if you fall short, you'll still land among the stars!"
awesome thanks guys. I put in an offer today, lets see what happens. Now I'm off to look @ more properties!
Doin DEALS !
Hey Lewis,
Glad we helped! Do tell as you progress with your offer-- we LOVE to know!
And, yes you're right when most of the comps are say 1300-1700 sf and your subject house is quite a bit larger-- yeah, you do use your AVG comp per sq ft... but pull back your vision too and get an overview. When you do, you'll find the larger the sf, the less the sf comp amt is, and vice versa-- the smaller your sf, the higher the comp per sf. Make sense?
I like to gain confidence by doing overviews on everything-- I look at things 3 ways and if they all come out close, I feel confident. For comps, 3 ways to look at it might be:
1) (like Karen said) within 1/2 mile, (like Matt says) within 20% of the sf of the subject house, like type of house, and don't forget Wholesale vs Retail-- and use AVG that price per sf
2) Look at what your BUYER sf target is... does this fall into that range? COULD it fall into that range if you look closer at the comps?
3) Look at what has been selling at WHOLESALE prices, does your calculation fall into that range?
There you go....
Do It! Do it! Do It!
(hah-- and Do It with a Headache!)
Never, Never, Never Quit, N3Q
"Nothing happens until you place an offer."
"Skip Deal #1, go straight to Deal #2; it's so much easier."
"There is nothing so useless as doing efficiently that which should not be done at all." — Peter F. Drucker... so, "Don't sweat the small stuff." -R.Carlson. "The greatest mistake you can make in life is to be continually fearing you will make one."~E.Hubbard, The Note Book, 1927...so, Do it for the right reason and "Do it with a headache!" - Dean Graziosi, Weekly Wisdom #176
I LIKE TO KEEP IT REAL SIMPLE... FIRST YOU NEED TO KNOW WHAT PRICE RANGE YOUR BUYER IS BUYING IN THAT PARTICULAR AREA, SO IF YOUR BUYERS ARE BUYING IN THE 100K PRICE ALL YOU HAVE TO DO IS GET THE HOUSE AT 90K AND MAKE A 10K PROFIT... THAT IS THE REAL SIMPLE WAY.. THE OTHER WAY IS TO GET THE COMPS SUBTRACT CLOSING COST AND REALTOR COMMISSION ALONG WITH REHAB AND HOLDING COST AND THEN YOU SUBTRACT YOUR PROFIT AND THAT IS YOUR OFFER TO PLACE
Ahhhhh, SIMPLE!
I like it-
Tahnks Mike!
Never, Never, Never Quit, N3Q
"Nothing happens until you place an offer."
"Skip Deal #1, go straight to Deal #2; it's so much easier."
"There is nothing so useless as doing efficiently that which should not be done at all." — Peter F. Drucker... so, "Don't sweat the small stuff." -R.Carlson. "The greatest mistake you can make in life is to be continually fearing you will make one."~E.Hubbard, The Note Book, 1927...so, Do it for the right reason and "Do it with a headache!" - Dean Graziosi, Weekly Wisdom #176
Ahhhhh, SIMPLE!
I like it-
Thanks Mike!
Never, Never, Never Quit, N3Q
"Nothing happens until you place an offer."
"Skip Deal #1, go straight to Deal #2; it's so much easier."
"There is nothing so useless as doing efficiently that which should not be done at all." — Peter F. Drucker... so, "Don't sweat the small stuff." -R.Carlson. "The greatest mistake you can make in life is to be continually fearing you will make one."~E.Hubbard, The Note Book, 1927...so, Do it for the right reason and "Do it with a headache!" - Dean Graziosi, Weekly Wisdom #176