Q: Where is the best resource to determine the value of a property.
A: For single family properties the best place is going to be researching similar properties in the same subdivision on the real estate agent’s multiple listing service.
When I am searching out comps in the MLS I first look up the subject house to see if it has any sales history in the system so I might be able to find out things like – when last updates were made. For example if the house was renovated and sold 5 years ago, it might show in the previous sold listing that the roof or furnace was new “this year”. Now you know that the furnace and roof are 5 years old. Very valuable information to have.
I also want to look at previous listings to find out what the exact subdivision is called. Then using that subdivision I will do a search for all active, sold, pending, contingent and expired houses in that subdivision in the past 6 months. Typically this will result in a list of houses that give 3 distinct price ranges – the low price ranges that are probably the bank owned houses and fixer uppers – the mid range houses that are typically either the rental properties of the area or the average owner occupant resales of the area – then the high priced houses which will typcially be the renovated houses.
By getting your “as-is” range, your average/ rental range, and your renovated range, you now know what your house should be worth and you can look at the photos of these comparable properties to see how your subject property might or might not need to be repaired. Now you are ready to go look at the house and evaluate it.
Q: But what if I don’t get any results with the above search?
If the subdivision does not net you enough houses that are similar. My next search would be to search in a radius around the house address, most MLS systems will allow you to do this. I search in a radius of .25 miles and then go up to .5 miles. But here you have to keep in mind that you will get multiple subdivisions and you want to make sure you are looking at houses in a similar subdision, so say you have some in the area that are 1950’s ranches and then a pocket of brand new homes were just built in that radius you would not want to be comparing the older to the newer.
If that does not give me enough, that tells me something too. If there just are no comparables, that tells me I may not want the house because if I can’t find comparables, the end buyer and their Realtor will not be able to find comparables and it might be harder to sell the house. It may not be an area that people want to buy, it will be evidenced by vacant houses in the area.
Or it may tell me that this is a highly desirable area where people do not sell houses. So if every house in the area is occupied and well maintained and there just are no comparables, then it may be that no one ever sells, and it could be an awesome buy if you can guestimate the right value for your resale, but it will be just that a guestimate – in this case I might expand my search of the area back a few years as houses in areas like this tend to hold their value.
And if the house is in a Rural area, I personally want to stay away or buy really cheap so I can have a very wrong guess at value.
Article provided by Kim Tucker with www.KCInvest.com