How to Do a Comparative Market Analysis?

[Account Closed]

it says i can compare 2 bedrooms to 3 bedrooms homes

then it says i can compare 3 bedrooms to 4 bedrooms

so my question is>

does it mean i cant compare 3 bedrooms to 2 bedrooms? only 2 to 3?

then 3 to 4?

[Frank Wong]

Hi Jack,

You can compare anything you just have to know how to adjust the price for the bedroom count.  This is by far the hardest and most important step in investing.  There is no set standard.  Each property is different based on size, the lot, condition. 

I would not use a 3BR to compare to a 2BR.  Those are 2 different types of houses.  I would, however, use a 3BR to compare to a 4BR and adjust for the bedroom count on my analysis.  WHY is that?  A 3BR house can still fit a family of 4 into it while a 2BR house is not the norm for that size.  A family of 4 will not look to buy a 2BR which will equal fewer buyers which will affect demand and price.  This has to be a factor in. 

When comping out a house 50% of it is Science.  You use BR count Bath, lot, sfqt etc.  50% is the Art.  This is taking external factor, layout, finishes etc into the count.  Like I said it's very hard to learn how to properly do this.  Everyone has their own way. I developed my system through experience and comping out over 5300 properties.