Trouble with comps

[Barri Griffiths]

Hi everyone,

I've just had an offer accepted for a short sale, which doesn't work as rental, but could work as a flip if the numbers are right on the comps.

How are comps usually run, do they go on the price per sqft on similar properties in the same neighborhood, or is it usually done on the sale price of very similar homes.

I thought it was th later, but when doing comps for this short sale my realtors were going off the price per sqft of homes in the same community.

For example they used properties that were around 1200 sqft, with a price per sqft of 105-107, with a sales price of around 125-135k.

But my property is over 1400 sqft, they're telling me That the market value is around 155k. Which is 20-30k more for just 200 sqft extra. This doesn't seem right to me.

Also just by using the price per sqft for the comps I feel like there's many other factors that could contribute to the market value.

If my realtors are wrong, what should I do? It would clearly show that they don't know what they're doing. But I still need to get comps somehow in order to make an informed decision. And need them to close the deal if I choose to close?

Thank you in advance for any help!

[Johnny Kang]

@Barri Griffiths

Negotiating a price on a short sale is more about who's willing to fight for it; having comps and learning to use deviation is great, but if you go in with just data, hoping the bank will see things your way, you've already lost. Data is I'd say 20%. 80% is going in with the mentality that you're gonna have it your way, come heck or high water.  Learn to use all the data you find as ammunition to "support" why you're offering the amount you're offering. 

When I do short sales, I get pictures of every single little problem I find regarding the property; get a licensed contractor to give you a detailed cost estimate to remedy it. If there's mold, get a mold remediation company to write up a report and the cost to cure it. If you see some cracks in the foundation or building, show pictures of it and how it's a huge issue. Show maps of where the property sits and point out that it's not on such and such block, hence the reason why it's less valuable than if it's on another block, etc. If you think 20-30k more for just 200 sqft extra is too much, show evidence why this is ridiculous. 

I even put how the bank is losing money on this property every month the owner isn't paying, and how it's in their best interest to unload this at the price I'm offering, as well as how they can carry the loss on their P&L statement. 

Are you going to win every one? Of course not. But you have to see yourself as a boxer/UFC fighter looking to get a TKO over your opponent, as opposed to thinking that doing short sales is about finding correct comps. With that said, you also have to have an agent who thinks this way too. Otherwise they won't convey your thoughts properly.