I agree with Rob, those things are pretty bad at determining what is “comparable”. sometimes they do not even get the right neighborhood. I would take the MLS over those any day.
Also - just because something is in the same neighborhood, does not make it a comp. You want to look at houses that are similar in age, size, amenities, and condition. I guarantee that houses that are similar in age, size, condition, and location, are not selling in a range as wide as 60k-125k at roughly the same time. if there is a 100% price difference between low and high, there is a reason for that difference, and the reason is that there are differences in the properties themselves.
In need of advice from the experts. - Posted by Shenesa
Posted by Shenesa on November 02, 2000 at 10:24:56:
Yesterday I met with a owner who is selling his 4br 2ba house for 69k. The comps in the area ranges from 60-125k. This house is good for a starter home or someone who has 1 or 2 children. The house doesn’t need any work. It is in move in condition. The owner is relocating and is still in area to sell house and will be joining his family after sell. The house was listed with an agent @79k but did not move due to her lack of marketing(owners words)The owner is open to owner financing. PITI are $600 @ 8.5% a month with 45-50k left on mortgage(I will find out for sure). Owner would like to pay off existing loan.
I would like to present two offers to the owner:
Do a subject to deal creating a note for 10k to pay seller in 5 years. L/O the house out with option consideration of 4k and tenant buyer exercising option in three years paying $870 a month giving me a cash flow of $103.33 a month
Offer to purchase house for 55k from seller then selling it for 75k financing dwn payment of 15k @ 9% with a ballon payment in 3 years to my buyer.
Posted by Anne-ND on November 02, 2000 at 10:41:38:
Hi Shenesa,
If the house is 4/2 why do you say it would be good for a family with 1 or 2 kids? Are 2 of the bedrooms not really bedrooms?
Also, try to narrow down the FMV. 60-125K doesn’t tell you very much. Some of those houses must be different enough from this one to eliminate from a comp anaylsis.
Posted by Shenesa on November 02, 2000 at 10:54:55:
Thanks Anne for your response.
The reason I said it is good for someone who has 1 or 2 children is because its a small 4br 2ba house about 1660 sq ft. I will try to narrow down the comps but this neighborhood is mixed with the old and new. I do not know if this makes a difference. I checked on Domania and this is the prices range that houses were sold for in the last 6 years.
Posted by Anne-ND on November 02, 2000 at 15:14:48:
Shenesa,
Your comps should only be based on houses sold in the last 6 months, in similar condition and in the same neighborhood. If your house is a newer house, and has certain amenities that only newer houses would have (attached garage, central air, etc.), then only the newer houses should be used as comps, and so on. Check the ‘How To’ articles on this site for some info on generating comps. If there aren’t very many houses near by, then expand your geographic range. But don’t use comps older than 6 mos.
Also, Anne’s comment about only using newer comps is more relevant in areas where prices are changing significantly. In many parts of the county, prices have changed little (if at all) in years, meaning that older sales comps will have more relevance. If you aren’t sure how fast house prices are moving in your area, ask a realtor. They will know.
Posted by Rob FL on November 02, 2000 at 15:50:54:
I tend to disagree with that last statement you made. I would rather keep my comp search in the similar geographic area and go back 2 or 3 years as opposed to pulling newer sales but in a different neighborhood.
In my opinion, older sales in the same neighborhood are a whole lot more accurate than newer sales in a different neighborhood. Almost like comparing apples to oranges.
As for domainia.com and some of those other sites, those are a true last resort for comps. I use them occasionally, but it is much better to use the tax rolls or a Realtor for comp info. Most of the comp sites end up showing properties that aren’t even close to comparables.