How do investors determine real estate value? - Posted by Richard Madden


#1

Posted by Redline on December 04, 1998 at 14:13:19:

I can see wanting to see that for curiosity sake - but just knowing what things are selling for right now is usually good enough.

I use the MLS primarily.

RL


#2

How do investors determine real estate value? - Posted by Richard Madden

Posted by Richard Madden on December 04, 1998 at 07:31:04:

As a real estate investor, I need to know the actual sale prices of property in a particular neighborhood/town/area before making a decision on how much to offer. I also like to do trend analysis for the past few years.

A couple of years ago, I started developing my own sales transaction database for my state (RI) and it has become my most valuable tool. I recently put it on the web.

Where do you get your sales information?
Would you use a web based subsription service? What percentage of your market does MLS cover? Do you think consumers/homebuyers would use this type of service?

I would appreciate your input and discussion. Thank you.


#3

Re: How do investors determine real estate value? - Posted by Rob FL

Posted by Rob FL on December 04, 1998 at 18:56:26:

You couldn’t use that info down here. In Orlando, all of our sales data is online. In FL about 25 of the 67 counties have all their sales data on the net.


#4

Re: How do investors determine real estate value? - Posted by Richard M

Posted by Richard M on December 04, 1998 at 16:21:58:

I’d really like to hear from people who do not have access to MLS. If I offered a real estate transaction web site for your area would you be interested? Or do you already get your information somewhere else and are quite happy, thank you.


#5

Re: How do investors determine real estate value? - Posted by JLM

Posted by JLM on December 04, 1998 at 13:49:22:

Richard,

How do you pull all these sales together. I looked at your site and it all seems like great information, unfortunately i do not live in RI. I was just curious where you get all the sales information from.

Thanks,

JLM


#6

Re: How do investors determine real estate value? - Posted by Richard

Posted by Richard on December 04, 1998 at 10:53:55:

Sounds interesting. Although I am in California
I’d love to see what you have done. Is your
web site on line?
Thanks


#7

A slight challenge with your concept… - Posted by Soapymac

Posted by Soapymac on December 04, 1998 at 09:32:17:

Richard,

I can appreciate what you are trying to do for yourself and the investor community. The challenge, I believe, is that this information is already available…if you are willing to dig for it.

As a RE broker, I have the MLS database available so that I may do “comps” (comparables) and a CMA (Competitive Market Analysis) when I need it.

As an investor, I could use www.realtor.com to get an idea of comps. It won’t be as accurate, but I’ll get the feel of a neighborhood, community…whatever.

If you are farming as an investor, then building a database of an area would be a good idea. Many investors, however, choose to scatter their investments in case a local “blip” causes prices to be depressed (massive layoffs…Hello Seattle!)

Don’t know if my wanderings helped but maybe you could modify your idea to make it more viable.

Cordially,

Soapymac


#8

Re: How do investors determine real estate value? - Posted by Jen (NE)

Posted by Jen (NE) on December 07, 1998 at 22:36:36:

I would be interested. I live in Omaha, NE (Douglas County).


#9

Re: How do investors determine real estate value? - Posted by ss

Posted by ss on December 07, 1998 at 09:35:13:

I’d be interested. Just like Stacy, not having access to MLS limits my purchases.


#10

Re: How do investors determine real estate value? - Posted by Stacy (AZ)

Posted by Stacy (AZ) on December 04, 1998 at 17:26:40:

I’d be interested in seeing what you come up with. Not having direct MLS access is one of my main problems…relying on others to pull comps, etc, gets old.

Stacy


#11

Re: How do investors determine real estate value? - Posted by Richard

Posted by Richard on December 04, 1998 at 11:41:49:

My website is at www.oceanbaydata.com
I worked the San Diego market for almost 7 years and lived very well, but if I had the information resources I have now I would have done a lot better.


#12

Re: A slight challenge with your concept… - Posted by Richard

Posted by Richard on December 04, 1998 at 10:19:05:

Are you saying that a non-realtor can go to www.realtor.com and look at actual sales data for a specific area? If that’s the case then yes I would have a real challenge competing.

If its just listing information, from experience I’ve learned what people ask for property and what property actually sells for are two different animals.

But if you have to be a realtor to gain access to that information then my audience would be non realtors or realtors who want a less expensive option for their information needs.

Looking forward to your response


#13

Re: A slight challenge with your concept… - Posted by Soapymac

Posted by Soapymac on December 04, 1998 at 21:04:34:

I read your post and re-read mine. There is something I left out, which is why I have the challenge.

As a RE broker, I have this information available to me now. As a RE investor who was NOT a broker, I would make friends with one…possibly have him look for deals for me on the “two sets of eyes are better than one” theory.

Making friends with a broker could allow you to look at his MLS books (as long as you stayed in his office) and did your research on “solds” there. Might cost you a cup of coffee and a donut now and then…a cheap, er, inexpensive fee.

All I am trying to point out to you is that there already exists a way to gather the information if you are willing to dig for it…and I would not want to see you building that kind of database when the TIME REQUIRED could be better spent locating properties for yourself.

Cordially,

Soapymac


#14

Re: A slight challenge with your concept… - Posted by Bud Branstetter

Posted by Bud Branstetter on December 04, 1998 at 11:18:40:

When I am buying I am not too worried about the exact FMV. Yes, I will discount for sale prices from 3 to 5%.
If I am buying 25% below market it is not really important to be exact. I will have enough profit built in that I shouldn’t go wrong.

On the other end when I have it under contract and put the sign out, I will scope the competition out. I will visit a couple of comparables and, in effect do my own appraisal. Their realtors don’t have a problem with giving me a market analysis for the property. If they have not remodeled their kitchen and I have, I will point that out to a perspective buyer to show why I am asking top dollar. They have something in their house I don’t, I keep quiet.


#15

Re: A slight challenge with your concept… - Posted by richard m

Posted by richard m on December 05, 1998 at 16:51:26:

I have been an MLS member in the past and from experience I say that from an information/knowledge perspective the MLS member has an advantage over the non-MLS customer/client/investor. Knowledge is power and my service attempts to help people who do not qualify for or can’t afford MLS access.

Your point of visiting an MLS broker is valid, however I choose to maintain my system because it is faster, more comprehensive and I believe less expensive than an MLS online membership.

What I’m really trying to find out is 1. Is there a real market for my service and 2. how to best market it and drive people to my site.

Do you have any ideas about that?


#16

Re: A slight challenge with your concept… - Posted by Richard M

Posted by Richard M on December 04, 1998 at 11:54:12:

I see your point. If you are buying at 25% below market there is plenty of room for error. I just feel better knowing every sale within say 1 mile of a subject property going back a few years. If you have access to MLS online you can get excellent info on 75% of the market, I just want to know more than the MLS.


#17

Richard, see me answer above… - Posted by Soapymac

Posted by Soapymac on December 04, 1998 at 21:07:58:

and I must share with you the “feeling” I am getting here is that you will start to suffer from “information constipation” aka “analysis paralysis.”

Soapymac


#18

Re: A slight challenge with your concept… - Posted by Redline

Posted by Redline on December 04, 1998 at 12:15:39:

Richard - I agree information is a good thing and I am NOT trying to be negative but …

“I just feel better knowing every sale within say 1 mile of a subject property going back a few years”

sounds to me like COMPLETE data overkill. I can’t see the vast majority of investors needing this level of granularity. Needing or wanting the data to plot some historical price line (or some other research) is fine - and might quench some curiosity. But imagine full time investors cutting 3-8 deals a month (or more) going in to this level of detail on each one? Seems like a waste of time.

RL


#19

Re: A slight challenge with your concept… - Posted by Richard M

Posted by Richard M on December 04, 1998 at 13:42:17:

I agree, sometimes it is overkill. But I can search and print that level of information in 20 minutes.

For example, a realtor sold a townhouse for 44,000, shortly thereafter another unit came on the market for sale by HUD for ~25,000, I did a trend of every sale in the complex since 1992 and found the sale prices had risen to 60,000 and then dropped back to low 30’s.
If that buyer/investor had complete info they never would have paid 44,000. I ended up buying the HUD unit for 22500.

What info source do you use to know what is really going on?


#20

This post proves… - Posted by Soapymac

Posted by Soapymac on December 04, 1998 at 21:12:46:

analysis paralysis is setting in.

If a realtor sold a unit for $44,000 and a similar unit came on thru HUD for $22,500…

it doesn’t take a rocket scientist to see that there is something of value worht investigating here.

Your example proves my point.

Soapymac