BP Podcast #344: Is he right?

Question

Good evening investors,

I was recently watching Biggerpockets Podcast show #344 on YouTube.

During this podcast, David mentioned that when he works with investors he doesn't look into comps for the property that the investor is trying to buy until it is under contract.

Shouldn't comps get verified before purchasing the property? Is this the same for all of you when working with your real estate agent?

Russell Brazil · Answer

I dont really look at comps, I know the market well enough to know the values without looking at the comps.  Also, the comps (unless we are talking about flips) are kind of beside the point.  What I can purchase a property for now, today, might be drastically lower or higher than the comps tell me. What I care about is what I can get the property for right now in the current situation.

Kenneth Reimer · Answer

Daniel, given your language, I think it's important to make the distinction between under contract and actually closing. If he's simply under contract and not yet non-refundable on the deposit, he can still back out of the deal with no financial downside. I haven't listed to the podcast yet, but I would imagine he  subscribes to the belief that you underwrite based on financials and determine the price you're willing to pay without letting other similar purchases influence your analysis. That being said, I use comps to evaluate whether the seller is in the ballpark or not. Hope this helps!

Kenny Reimer