Can anyone help me with Analyzing Properties.

Question

Hi my name is Jennie,

Right now I am finding properties for a investor as my learning process, however, I need help in learning how to analyze the property, determine the ARV, Comparable, and how to determine if the property is worth sending it to him. I send him properties, but it obviously isn't what he is looking for. How do I determine the market value. I am trying to master this skill before I move forward.

Please Help!

Scott D Fitts · Answer

I don't know if there is any simple way to explain the process of evaluating properties, except to say, "practice makes perfect".  I look at the ARV as what I would be able to sell the property for in that neighborhood, if the property was upgraded to the upper end of conditions for the neighborhood.  What I do is look at how I would value the property and then ask others "experts" on what they would value it at.  If we are a thousand or less apart, then I figure I am doing it right.  The one key I have found in the process is making sure I am comparing apples to apples and oranges to oranges. In other words, comparing ranches to ranches, capes to capes, etc; keeping the square footage of the comparables to plus or minus 20% and BR and Baths similar.  I use only sold or pending sale comps and not listing comps.  The idea is to find out what someone would be willing to pay for the property if it is in top condition.  Sometimes it is difficult to find sold properties in the neighborhood that are similar, and that is where adjustments come into play. I believe the only way to evaluate the adjustment amounts is experience. What is the value of a bedroom or a bathroom. What would a person be willing to pay for that extra or the other way around, because the property is missing a bathroom or bedroom.  I can tell you that you want to be careful when the property is on or near water, or has a tremendous view.  Those features are game-changers in pricing.

Scott DeLange · Answer

I am curious to see some answers to this as well ....