Comps

[Jasmine Claye]

Is there an approximte # of recent sales needed to get a good ARV?

[Bill Gulley]

There are many instances in RE where you must anticpate the market in the future as well as study current market conditions. Part of the risk in RE is having a foggy crystal ball. A large factory near by that announces layoffs or a closing after you buy can change the market of a neighborhood. Keeping tuned in to your community can give some assurances. Ignoring seasonal markets will cost you money. Just as Jon points out, just because a property comps out at one price today is no guarantee it will hit that mark 6 or 9 months later.

If you can look at the stats on the mls, you'll see the days on market of sold properties and the average days on market as well as mean or average home prices. This is helpful to identify a good farm area, an area to work in. 45 days is uaually a good market area IMO. That will generally average enough comps in a neighborhood for reliable data, it indicates an active market and one in demand. IMO, shorter periods like 20 days indicates a hot area and one that will usually demand a premium price, not many deals to be had there.

These averages also indicate market stability of prices for mature areas. Increases in price can be seen in directions toward growth areas. Usually these historic trends over the past few years will lead you to areas of higher demand and rising prices as well as a stable market on a micro scale.

Having only 2 comps, good comps, IMO is not sufficient to predict decent pricing 6 or 9 moths out, unless as I said the market is hot, which is probably not the case. IMO, the market is more of a concern than the price, you can pay less per ft or for amenities but if you end up holding for longer terms to sell, that deal can quickly turn sour. This is also, basically, location, location, location!