Tips on how you determine market value of a house??

Question

Hi,

I'm a new investor and I'm trying to find the best ways to determine market values of homes in an area I think I may send mailers to. I'm noticing there are so many houses for sale and the prices are very inconsistent. I'm trying to analyse it by price per square foot, but I cant find any consistencies. In this market there are more foreclosures then standard sales. I can tell there is a lot of investment activity.

Any tips on how you determine market value of a house? Do you look at the price per square foot, or sale price? Is there a rule of thumb here??

Thank you!!

Robert Adams · Answer

Perhaps try sending mailers with recent sales in the neighborhood and then do a CMA on the homes that reply to your mailers and tell them the price that you feel you can list and sell it at for them. This way you are giving them an accurate price based on their specific property.

Best Regards,
Robert Adams

Best Regards, Robert Adams

J Scott · Answer

The process for finding the market value of a property in ANY area will be exactly the same -- it's no more or less straight forward in that area than any other.

If you're looking for a way to *easily* determine market value by using price/sf or some other basic metric, it won't work. You need to find comps, adjust the value of the comps based on differences and then weight the results. It's not rocket science, but it's certainly not easy.

Account Closed · Answer

Thank you for your reply! So do you think I should stop trying to rack my brain on figuring out the market value of properties in that area (since it doesn't appear to be very straight forward), but instead focus on getting out there and finding a deal by sending my mailers, following up and once I get someone interested, then figure out the market value of that specific house by the method you just explained?

When I purchased the house I live in, it was so straight forward. All the homes were around $250 psf, and if they were way under it was because they were trashed. (I live in Orange County, Ca) I'm looking in other counties for investment where the foreclosure rates are much higher and prices are lower.

Thanks for your help!!

Robert Adams · Answer

Running a CMA on a neighborhood that is all over the place with past sales with homes that vary in floor plans and sqft can get tricky sometimes. What we try to do is take the subject property and the most recent sales (within the past 3-4 months) and adjust the SOLD price to match the subject properties condition. For instance, we make adjustments in SOLD price for pools, upgrades, lot size, etc. Pretty much any items that would affect the price except for the living square footage. After you make the adjustments then you break down each SOLD property's new adjusted SOLD price and divide it by the homes sqft. At that point you should have a list of the current SOLD properties price per sqft after adjustments. This should give you a good idea of the price per sqft for your subject property. Then multiply that number by the subject home's sqft and it should give you a pretty accurate list price for your subject home.

I hope this helps!

Tips on how you determine market value of a house??

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