Does my home value count just as much?

[Antonio Bodley]

If I was a cash buyer, would my home estimate of the house I want to buy matter just as much as another cash buyer looking at that same house? Let's say I see a house I want to buy and resell to another cash buyer. I run the comps on the property and have my own idea what the property is worth. Another buyer run comps on that same property have their own idea what the property is worth. Each of us have different ideas what the property is worth? Is there a right and wrong in this case and if so who is right and who is wrong? Here is a scenario. I run across a 3 bedroom 2 bathroom house with 1,404 sq. ft built in 1927. The comps for that property are below.

House 1 sold for $79, 500; last sold 8/24/11; 3 bedrooms and 2 bathrooms; sq. ft 2,300; year built 1937; 0.08 miles.

House 2 sold for $70,900; last sold 10/11/2011; 3 bedrooms and 1 bathroom; sq. ft 1,792; year built 1910; 1.01 miles.

House 3 sold for $24,746; last sold 7/18/11; 1 bedroom and 1 bathroom; sq. ft. 736; year built 1930; 0.11 miles.

The other buyer looks at that same property and has their value of $58,000. I look at the same house and have my own value at $64,000. We both ran the same comps got the same results. We both looked at the property in person, but we both got have differnt ideas what the property is worth. If both of us are cash buyers and have our own idea what the value is, who is right and who is wrong in this situation?

There are no recent solds for any of the properties I want to wholesale, so this is going to be very difficult when I am running comps.

[J Scott]

As Don mentioned, there's as much art as science when it comes to determining value. Even two highly skilled appraisers may come to conclusions that off by a non-trivial amount...certainly two investors will.

Also, here's something else that's very important to consider in this market -- there are actually TWO very important valuations an investor needs to determine:

1. How much a buyer will pay for the property after repairs (ARV);

2. How much the property will appraise for by the buyer's lender.

These numbers may be vastly different depending on the specific market and property -- without knowing both, you may find yourself in a tough predicament.