Real Estate Investing with Brian Evans Jr.
"Do Your Due Diligence!"
So you’ve talked to the seller and you’ve set up an appointment to come and take a look at their house. Now what? Now is the time, now and only now is it time to do your due diligence! There’s two types of due diligence you’ll do. There’s the pre-visit and then there’s the post-visit or at the property due diligence.
For the pre-visit, here’s what you do. Number one, you need to verify the comparables, most often referred to as comps. You should have access to the MLS even if you’re not a realtor. If you can get access, that’s what you need to try to do. We have a realtor friend or two that honestly, gave us his login information and that’s fine. In return, sometimes we list deals with him.
We’ve found a relationship to where we can do that, because you need to be able to pull comps. Bottom line, you have to or you have somebody on your team that can pull comps or have a realtor friend you can call. If you can get MLS access to your area, that’s the key!
Zillow is NOT a comp! You need real comps. There are other online subscriptions you can purchase to be able to pull comps, but I’m not certain how accurate they are.
What is a comp? A comp is a property that has sold in the most recent time, past three to six months or sooner would be a pretty good. It’s a property that is similar in proximity. A good comp is within one mile of the home. A better comp is in the same subdivision. The best comps are on the same street.
If you can’t find a good comp one mile out then go out a little bit further. Use common sense because here’s the thing about determining values of homes and appraisals and BPOs and all that kind of stuff. An appraisal is just someone’s opinion. You get ten different appraisals on a property you’re going to get ten different numbers. It’s someone’s educated opinion. I train you to make an educated estimate on what a property value is. You are just as smart as anybody else to make an estimate on values of homes!
Your comps should also be similar in size and amenities. Ideally, you want your square footage to be plus or minus 200 square feet. The number of bedrooms and bathrooms should be the same or close. Construction should also be similar in style. Comp with a ranch style home with no basement is not the same as a split level with a basement. It’s not exactly the same, but if that’s all you’ve got you do the best you can. You’re trying to get an idea of what this house is worth. Age and any extras in the home, any amenities, pool, bathroom, garage, all that kind of stuff should be taken into consideration. It really is common sense to a degree!
And then what I like to do is to pull the tax assessment value of each property before we go out and see it. I like to know. It gives me a little bit of sales history. In my area, we can go online. In your area maybe you can or cannot do that, but if you can look into it. In our area it’s called a PVA, Property Valuation Administration. We can just go on their website, type in an address, and here’s the sale history and who owns it and all this stuff. I’d be surprised if you didn’t have something like that in your area.
All of these ideas are important tips you need to take into consideration when pulling comps for your homes. The more experienced you are and the more you are pulling comps, the easier it will be for you. Don’t overlook how important this step is in trying to determine accurate prices to try and get your homes under contract for!