Almost the first thing that an investor is to decide if it has a business to make an offer, you determine after repaired value (ARV). If it is thick enough to need leave property spread or profit margin on the property when he sells it or the buyer cannot detoxification it and resell it at a profit. If he's buying it to rehabilitate himself, he can afford to pay more than if it were a wholesale business, but it must have an idea of what he can sell it to him after he rehabs.
Investors buying for rent and contain properties are usually more concerned with the price so that it can determine what your monthly cash flow. If they are buying single family homes for rent, they're doing so with the intention to rent until the market undertakings and then taking a big gain in the coming years-a retirement nest egg, so to speak.
The usual way to find comparable sales is to search the public records, MLS or an online service that shows sales of recent months. Comparable means that the property is within a specific geographic area around the subject property and +/-10% of the square footage of the subject property. Over the years lenders changed their criteria for lending and has gone in the last 12 months for the last three months in terms of recent sales. Often creditors want a sale comparable to the MLS, so they can see pictures of her, or within the same neighborhood.
Usually find comparable sales is fairly easy, but it can have some real problems if the lots are great, for example many hectares each, houses vary greatly in size in the same neighborhood, other similar properties are distressed sales (short sales or foreclosures) and few or no recent sales to name a few problems. One of the most overlooked problems is mortgage fraud in which a buyer straw was involved.
A buyer straw is a person who acquires a property and informs the lender that he will live in the property. In fact the buyer only is lending his claim for the purchase of the property. The seller has really recently acquired the property for a much smaller amount ($ 100000 for example) and is selling it to the buyer of straw that believes that the seller will be making mortgage payments for him until he re-sells it at a profit.
Unfortunately the seller is a con artist who takes profit of $ 100000, rent the property and collect rent the tenant, but never does more than a couple of mortgage payments. This scam is created by making an initial purchase of scam artist of another property in an inflated value and closing cash (remember he is paying yourself) to establish an actual sales price in the neighborhood. With this new sale high in the area he can begin making so many fraudulent transactions until it gets stuck or moves in letting the buyer straw at shutdown. The result is a sale that can be from 30% to 40% by FMV in a sale comparable to an appraiser that comes later.
Although it may be an effort to look at each sale comparable in the neighborhood, it can save a buyer of overpaying on a property. The final issue that I see as being misleading in comparable sales is where the Interior of a property has had huge upgrades, especially the historic structures where they can turn into wells money quickly. Buyers of these properties rehabbed may over-pay because they fall in love with the property that causes this sale comparable to be distorted.
The best way to determine what you can sell or buy a property for must call all properties listed and for-sale-by-owner in the neighborhood, see properties and negotiate the purchase each mercilessly until you get the final price of the seller. This price in each case is his true competition, comparable sales not possibly untrusted.
Dave Dinkel has been a real estate investor since 1975 and wrote a program for real estate investors who are afraid common estimate repairs. Within minutes, any investor can walk through a property and accurately estimate the repairs and much more. This valuable addition to the arsenal of every investor can be http://www.excelresoftware.com views
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