When it comes to wholesaling real estate, one of the traps people get into is not knowing their potential area.
What I mean is, when new wholesalers get a lead, they don’t look at the surrounding environment or they look at homes outside of that area.
Stop doing that.
But Jamil, how else am I supposed to find out the value of my property deal?
By comping, but comping in the right way, which gives you a more efficient and effective ARV than just randomly guessing.
And I’m going to show you how!
How to Comp Real Estate the Jamil Way
I know how you comp right now:
Advice from your friend who does real estate, gives you her list of rules, which is wrong
That same friend gives you pricing for a property, but when you talk to other wholesalers, they don’t understand where you got that number from
The $500 course you took that said you can go a mile away for your comps
Guys…all of these things, all of it, is WRONG!
Because buyers are looking for you to comp your properties the way an appraisal does.
Appraisers are the magic ingredient because they’re the ones who are going to tell you the actual value of a property.
The appraiser has a set of rules they follow that gets them to the actual value of a house and they are as follows:
Only comp houses +/- 200 sq feet
Only comp house +/- 5 years of construction
Only comp the same property type
Only comp lot size within 2500 sq ft
Don’t cross major roads
Don’t leave the subdivision
What Appraisal Rules Mean
Whew! That’s a long list, but what does it all mean?
Let’s look at the +/- 200 square footage rule. This rule means that you cannot comp a house that is more than 200 square feet.
So, for instance, if you have a house that is 800 square feet, you can only comp houses in that area that are 600 or 1000 square feet.
You cannot go outside of that range because the profit margins don’t relate.
This is the same for the +/- 5 years of construction; you cannot properly compare a house built in 1975 with a house built in 2005.
Do not compute.
It has to be within the years of 1970 or 1980.
One of the biggest misconceptions with comping that I see are new wholesalers trying to comp small property lots with larger property lots.
Even if the houses on each were built in the same year, have the same square footage, and are the same property type, it’s still NOT A COMP.
Again, you want to follow the appraisal rules to get the best numbers when it comes to ARV.
So, I’ve explained how appraisers look at properties and what rules they follow. Now, I’m going to show you how to EASILY start comping like a pro and for FREE!
Using the Zillow App to Comp Real Estate
Zillow is a popular real estate website, used by realtors, buyers, sellers, homeowners, etc.
Having it on your phone makes it easy for you to comp a property when you’re on the go or when you get a text about a lead.
Did I mention that it was free?
The way I use the app, I put the address of a property in the app, making sure that the option for homes for sale or that have recently been sold.
Then I’ll start looking at the homes in the area.
One thing I’ll look at is the Zestimate, which is the price that Zillow believes the home is worth and will sell for.
Usually, this is due to what was sold in the area previously, so this might be the ARV, but not always.
Once I have that as a base, I start looking at the homes in the area, again, making sure that I’m matching property, square footage, same subdivision, etc.
If you want to watch all of this in action, check out the video below:
And that’s it!
That’s how you go about comping properties the right way, so you get the most value for the property you want.
If you want more tips and tricks, as well as guidance and support, come join us in the Astro community!
Cause the more you flip, the more you want to do it!