Private sales for comps?

Question

Hello Community!

Does anyone check fsbo sales (not on the mls) when trying to comp a property out? Also, how would you check the fsbo sales? Tax records? Thanks in advance!

Rich

Chris Martin · Answer

I check all sales. Yes, tax records is a good definitive place. Just make sure you account for transfers that are arms-length sales vs. related entity or non-market transaction.

John Moore · Answer

In my area we are concerned with what the appraiser will give us when the house is compledted for flipping.  All of the appraisers that I have encountered utilize the MLS for comps.  Not only am I concerned with the acquistion price, I'm also concerned what I can get when I attempt to flip the property.

Rich Harris · Answer

Thanks @Bill Gulley for the response. I never thought of it that way. I will read the definition of market value so I can try to fully understand what you have touched on. Thanks again!

Rich Harris

Bill Gulley · Answer

Chris is right on target. Private sales are mentions but are not good comps for a market value analysis. FSBOs can be but any sale to be used must meet the definition of market value.

The definition of real estate market value is long, you need to look it up and read it. If any one aspect is not met that sale price may not reflect a market value. Pay attention to days on the market and understand the general market. In a hot market you may have a sale in 3 days. Was it priced right or were there other influences? Was a sale at 197 days overpriced? Was the price dropped over a period of time? Selecting good comps requires some due diligence.

You can't really go by a sale with different names as you have family with different last names as Chris mentioned. If the property was not exposed to the market through advertising it's not a comp as it fails to meet the definition of market value.

I've seen private sales, and I've done some, where other personal property was involved that influenced the price agreed to,  certainly a consideration that spoiled the transaction as a comp.  The price can be higher or lower. Property trade transaction should be avoided as comps, too much to consider in valuations. :)

Rich Harris · Answer

Ah ha, cool, thanks Chris. I'm a newer wholesaler, and even though I read on this site hours each day, it seems like the more I learn the more I NEED to learn. Have a good day my man.

Rich

Chris Martin · Answer

Yes, like same last names, transfers to related entities (e.g. LLCs controlled by the owner),  transfers to in-laws (usually low or no tax stamps) or other family w/o same name. Non-market transactions would be forced sales by trustees, transfers to estates, owners with "heirs" in the name, etc... all legal transfers but not based on "market" conditions.

Rich Harris · Answer

@Chris Martin, thanks so much for the response! You were my only one. When you say account for arms-length sales vs. related, I'm guessing your just talking about the same last names? Also, and please forgive my ignorance, but what is a non-market transaction? Thank you very much for your time.

Rich

Private sales for comps?

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