Ok, today I want to talk about comps… finding comps on properties in a simple way.
So, a coaching student of mine was complaining that it takes her so much time to come up with offers and find comps and she’s frustrated.
My first thought was: Why is it taking so long? My second thought: Why are you doing it? Why don’t you hire a VA?
So I explained how I find comps…
I just do the averages when I’m looking for the ARV (after repair value) of a property.
I keep it super simple — and I just average the price from 5 or 6 different sources like Zillow, Redfin, Realtor.com, Eppraisal, PropStream, Real Quest Express.
Just put them in a spreadsheet and average them. Simple.
I also like to look at the median. No math skills needed, just Google how to do that Excel. Also simple. Basically, finding the median is ignoring the prices that are really cheap and the ones that are really expensive, so you get a good round number.
I compare those two — the average and the median — and sometimes I just go with the one that looks like it makes more sense. That’s it.
If I were to do it myself, it takes a couple of minutes. If you have a VA who hat does that for you AND gives you the ARV, you’re rockin’.
Ok, the offer. If I’m going to make a cash offer, it’s super easy…
I like to look at the 3 lowest sold comps, average them, and multiply that number by 80%. That gives you a good place to start. You may think it’s too low and the seller will be mad — but that’s the kind of cash offer you want to make.
If it doesn’t make you uncomfortable and a little queasy, then you’re offering too much.
Side Note: If the house doesn’t need any work at all, do 70% to 75% of ARV minus your wholesale fee. But typically, when you’re wholesaling properties, they need some work anyway.
When you do come up with the cash offer price, compare that number to the active listings. There’s a super-easy way to do this on Redfin. You can probably find a how-to video on YouTube.
Ok, I’m gonna throw some numbers at this…
Let’s say a house is worth $180,000 fixed up, and the 3 lowest solds average $100,000. 80% of that is an $80,000 offer.
You want to make sure to add in your $10,000 wholesale fee — so you’re going to be advertising the contract on that property for $90,000.
And, you want to make sure there aren’t any active properties listed for sale on the MLS for less than what you’re trying to sell your property for…
If there are properties for $85,000 or $80,000, buyers are going to think you’re an idiot. They’re not going to pay $90,000 for your house when they can buy a similar house that needs less work for $80,000 somewhere else. :-/
Always compare your prices.
Last thing — when I’m making an offer, I’m always thinking about how I can make this deal marketable to my buyer.
Is your buyer:
- A tenant-buyer for a lease option?
- A cash buyer?
- A landlord?
- A fix & flip investor?
- A buy & hold investor?
When you’re making your offer, think about how you can make the deal the most attractive to that end buyer. For example: Does your end buyer have cash or do they want terms? That’s going to help determine what kind of offer you make.
See… no need to overthink it or take tons of time. Follow my simple steps, or better yet, have your VA do it, and you’ll be able to make LOTS of offers.
Remember: The way you do deals is by making offers.
So go do it.