Price Ratios between distressed and retail sales
Fausto CarosellaPro Member
Real Estate Broker · Boca Raton, FL · Member since 2014 · 98 posts · 23 votesHey guys,
I've been searching around and haven't quite found an answer to this specific question: How can I find the price ratios between distressed and retail sales in my potential farm area (one zip code for now) without going through an agent.... if that's even possible?? Also is there a way to tell how many retail sales are expiring, getting leased out as opposed to being sold, or foreclosed on because they can't sell? Again, I know the simple answer is talk to an agent, which I'm sure I ultimately will, but I'd like to know if there are ways I can go about doing it myself. I'm inclined to needing the answers at 1:00 am when I can't turn my brain off :-/ I was able to determine the supply of real estate through Realtor.com by simply searching the recently sold and the currently listed. Any other factors in determining if my potential farm area is a viable one seem to be qualitative, so I'm sure I can dig that info up easier. Any suggestions would be great! Thanks!!
Yes, by "public side" I mean the data and functions available to the public. Begin with the MLS Home Page instead of search functions to look at properties and that may lead you to general trends.
Well, I'm not agreeing with that analysis or assessment of rehabbed vs. leased or other sales.
Identifying such classes may be possible, but, go back to basic statistics, sample size and deviation, degrees of certainty and of like units.
I think J. Scott, the author I believe, was from the Atlanta area, now in the D.C. area (I think), I believe I followed him off to some other large metro area over the years as well. Anyway, the size of a market, population of a million plus certainly impacts the sample size to allow analysis, Ft. Myers and Springfield, Mo. are nowhere near these sample sizes. Next, a 100 K distressed sale has nothing to do with 200K home sales, unless they are comparable, RE is unique from many vantage points, size, location, quality, materials, age, condition and so on.
Next, if all or most of the distressed properties were sold, why is that, why were they distressed, condition or foreclosure or did a clan of bad housekeepers leave a small town? Past sales indicate past inventories, not current inventories which is what you'd be working with. In markets like ours, you could have 4 subdivisions with 200K homes, new construction that could be selling like hot cakes that will skew that perception, you rehabbed 1982 ranch may or may not compete, and usually won't even if you sunk 100K in it.
The objective measures to valuation, market activity, inventor supplies and housing needs have been around about a hundred years, technology hasn't and won't change the approach but can make things easier. That's saying that one's opinion as to how to evaluate a market that is unconventional or based on assumption will be just that, opinion and opinions are not objective, they will be subjective. What forms opinions will be based on our experiences and other factors, but where those experiences were gained will certainly influence us. Stick to the proven, accepted, customary inventory approach banded in smaller price ranges by area.
I've not read the book, but jumping from 100 to 200 isn't going to be statistically valid as a population for analysis, that is too far apart in any market.
I suggest you concentrate on the goals at hand, learning the basics, local methods and markets and getting past that examination. On the "agent's side" of the MLS you'll have more than enough analysis tools available to sliver your market and dice out what you might be interested in. Good luck! :)
Distressed sales are unique, so are properties, to my knowledge there are no stats that do that comparison, except total sales that are usually public information on the MLS.
Not sure what that would even tell you in a market area. Each neighborhood can be different.
Expired listings are on a public side here, they will show as being expired and agents drag their feet pulling them off.
Need to watch the MLS closely, look at new listings, that will later feed either to sold properties or expire, generally in 6 months. You can also store a list of properties you're interested in, your watch list, so you could develop your own system on a time line.
Most MLS systems provide a lot of features and data on the public side, know the system and you might be surprised at what you can track. But, this stuff often leads to over analysis and obtaining useless data, it can be entertaining but not that useful in reality. Each property is different.
Might explain what you're trying to accomplish. :)
Thanks for the reply... By "public information on the MLS" do you mean it's something I can access myself not through an agent or with me having my own license..? Same with the "expired listings...on a public side"? I know ultimately the best way to do any of this is to have access to the MLS myself, which I don't have. I'm actually taking the classes next month to get my license because It seems to keep coming down to access to the MLS in one way or another is the easiest/best way to get the info needed. I'm referencing "The Book on Flipping Houses" put out here by BP as far as what that info would tell me in a given market. In the book they say, for example, if distressed properties have recently been selling for 100k and similar retail properties have been selling for 200k, then you know it seems like a good "farm area" because there's plenty of room for a profit. Or you'd know if those retail sales keep expiring or getting leased out its probably not a good area... So ideally I'd like to be able to find some of that data without going through someone else (MLS), eventually I'll have that access but until then I'd like to not be stagnant. Do you have any other suggestions or any ideas as to how I might determine if where I'm looking seems to be a god bet?
Thanks-- Fausto
@Fausto Carosella I briefly bought a couple of properties in Ft Myers, and I think the property appraisers site, GIS map has a function for recent sales? You won't have access to interior pic.s and such, but you may see a trend.
Hey Fausto,
If you're willing to comb through LOTS of data, you can probably get a reasonable idea of distressed property and retail property ARVs using Zillow or Realtor.com. You'll need to do a lot more manual work than you would (or an agent would) by using the MLS, and you won't have quite as accurate data, but since you're just trying to get a rough idea of ratios, this would work.
Btw, I'm glad you're doing this exercise...I find that this is the second best indicator of whether your farm area is ripe for flipping (the best being the number of other ACTIVE investors in the area).
Yes, by "public side" I mean the data and functions available to the public. Begin with the MLS Home Page instead of search functions to look at properties and that may lead you to general trends.
Well, I'm not agreeing with that analysis or assessment of rehabbed vs. leased or other sales.
Identifying such classes may be possible, but, go back to basic statistics, sample size and deviation, degrees of certainty and of like units.
I think J. Scott, the author I believe, was from the Atlanta area, now in the D.C. area (I think), I believe I followed him off to some other large metro area over the years as well. Anyway, the size of a market, population of a million plus certainly impacts the sample size to allow analysis, Ft. Myers and Springfield, Mo. are nowhere near these sample sizes. Next, a 100 K distressed sale has nothing to do with 200K home sales, unless they are comparable, RE is unique from many vantage points, size, location, quality, materials, age, condition and so on.
Next, if all or most of the distressed properties were sold, why is that, why were they distressed, condition or foreclosure or did a clan of bad housekeepers leave a small town? Past sales indicate past inventories, not current inventories which is what you'd be working with. In markets like ours, you could have 4 subdivisions with 200K homes, new construction that could be selling like hot cakes that will skew that perception, you rehabbed 1982 ranch may or may not compete, and usually won't even if you sunk 100K in it.
The objective measures to valuation, market activity, inventor supplies and housing needs have been around about a hundred years, technology hasn't and won't change the approach but can make things easier. That's saying that one's opinion as to how to evaluate a market that is unconventional or based on assumption will be just that, opinion and opinions are not objective, they will be subjective. What forms opinions will be based on our experiences and other factors, but where those experiences were gained will certainly influence us. Stick to the proven, accepted, customary inventory approach banded in smaller price ranges by area.
I've not read the book, but jumping from 100 to 200 isn't going to be statistically valid as a population for analysis, that is too far apart in any market.
I suggest you concentrate on the goals at hand, learning the basics, local methods and markets and getting past that examination. On the "agent's side" of the MLS you'll have more than enough analysis tools available to sliver your market and dice out what you might be interested in. Good luck! :)
Thanks for all your replies everyone...
@Wayne Brooks wow... I just found that on the appraisers site... that's extremely helpful! I wish it could be narrowed down by specifics even more but I'll take what I can get!
@J Scott Great set of books! I hope I can put your techniques to good use. I'm definitely willing to do as much legwork as I need to. I'm hoping I can find one property within the next few month to at least take a stab at it. From the county website I can see a lot of LLC's have purchased properties in the zip code I'm looking into. I'm going to be joining the local REIA as soon as I can as well and soak up some info.
@Bill Gulley I can definitely see what you're saying as far as using only numbers might have me comparing apples to oranges, if that's all I'm using. I'm definitely sticking to a very small area until I'm confident I know A LOT more about the area since I've only been around here for a year. Until then I suppose I have to network as much as possible and keep my eyes and ears open!