Real Estate Investing: Comps May Dictate Your Success As An Investor

Where you find your information and how you use it will go a long way in determining your success on a given property. If you are looking for a quick flip, your price will be determined by the comps you use. In fact, almost everything you do from that point will be reliant on the comps you use. Local properties will shape everything from your price to your renovation projects. By relying on old or inaccurate information, it will result in a lower price and less money in your pocket. Properties you are comparing the subject property to are the ones that buyers and realtors will be using. Just make sure they are the right ones. Using the appropriate comps in your area is absolutely critical to your success as an investor.

There are many instances where overzealous investors have unrealistic expectations for their properties. They may have seen a similar house in the area sell and automatically think they can get the same amount. Unless you know everything about that property, you are setting yourself up to fail. Start by looking at properties that have sold within a one mile radius of your house. Anything farther out than one mile can’t be considered a good comp. After you have your list of properties, you can start to go to work.

Look at the style, size, location and amenities of each property. The more differences, the less likely that a buyer will use that as a comparable. Even though you may give value to a pool, deck or fireplace, it does not mean that they will. Sure, some value must be given, but you need to be careful in placing a firm price on any one of those items. The only items that should guarantee value are living space (square footage) and bedrooms.

The best place to find sales and pending sales properties are through the MLS. If you are not a realtor, you will not have access to it. This is where having a license comes in handy. It is a bit of an effort to find comps, but this is the main part of their jobs. They should be able to provide you with sales for the last six months in your area. Listen to their advice and suggestions on what they think they can list the home for after you are done with your work. Don’t ignore their suggestions just because you think the quality of work will be nicer or you like the location better. Your realtor knows the market better than you and will know what a realistic value is.

Look through each comp and see if any deductions were made for a buyer paying cash or for a foreclosure sale. This is important information that you could use to increase your price. You can look at internet valuation sites as a starting point, but if you want to dig a little deeper, you will read the actual listing sheets. This is what they are there for and need to be used even if you think you have a good idea on the area.

Money is made in real estate either on the buy side or when you sell. If you do decide to sell, you need as much information as possible to make your decision. It is not enough to have information, but you need to look at the right information. With the help of your realtor, you should know as much about the property and the area as possible. Use this data to get the maximum return when it is time to sell.$

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