Comp search technique, whats the correct way?

[KJR2008]

When I was with my mentor the technique used to find the correct comps left me somewhat baffeled as to exactly how this procedure is to get the best comps available. He would research the subject info through the appraisal district web site, search the MLS using the sq ft, year built, and sales within 6 mos if possible, and three to four comps were selected. All of this was done prior to inpsecting the subject, the comps pics were taken at the same time he was in the area to inspect the subject. Is this the proper way to go about selecting comps for a property unseen. Many times the vaule range of the comp search would be from $125,000-$250,000 how would one decide where in this range would the subject fit if the property is not yet seen. I am no longer with my mentor, whats the proper technique to selcet the best comps?

 

[Randolph Kinney]

A secret to comparable selection is to know the neighborhood the subject is located in and what sort of factors govern value.

If there is a wide range of value, then it means the neighborhood is not that uniform. One way to know what the subject looks like is to use either Google Maps or Microsoft's Virtual Earth. You can even look at or for comparables too.

You can usually discern what is driving value or the variables involved. You should not limit yourself to just 3 or 4 potential comparables. Gather up all properties that could fit the subject profile and location.

 

[Artemis Fowl]

What he said. I will bring MLS printouts with me of everything that MIGHT be a comp based on preliminary research. After visiting the subject, I will sit in the car and narrow the list. Then I will visit the comps and make simple notes about them to record my impression of their relative comparability to the subject.

For really tricky problems (complex market conditions ie. lack of similar sales) or litigation type assignments, I may even knock on some doors and ask questions. People are usually willing to discuss their homes after you explain what you are doing. Bring a wallet card of your license to show if they ask for it and leave a business card.

EDIT: Google or Virtual Earth the property before you visit! Can sometimes reveal externalities that influence your comp selection and save you an extra trip. Don't limit yourself to sales. Reasonably priced listings can be valuable too and sometimes you can walkthru one if they think you are a potential buyer (you don't have to lie about this...just say you are interested in seeing the house they have for sale and leave it at that).

 

[Pamela Crowley (Florida)]

The only time I would use a $$$ range is to find out what properties were listed and/or sold in that range AFTER I found the "newest sales of the most similar to the subject properties that were located in the nearest proximity". Typically this $$$ range search was to complete the proof of why the subject is not worth what 'they' wanted it to be.

I would always bring all my search printouts to select the best of the sales choices for 'comps' after I've seen the subject. Typically, I would drive by, take notes, and photograph at the very least six of those potential comps.

 

[Charles Knutson]

Hi kj --

Welcome to the Forum!

I generally follow your mentor's approach, but I go out into the field with a summary of all relevant sales. If there are a lot of comps, I'll go back 6 to 9 months with a one mile radius -- if comps are scarce, I'll go back 12 months and expand the search radius. If the market is declining, comps that are less than 3 months old are the best indicators. If comps are very scarce, I'll look at sales data going back several years, to try and get a feel for the long term market values and trends. After inspecting the subject, I'll inspect 6 to 12 of the comps most similar to the subject, and include 4 to 6 in the report.

Colorado is an open public records state, so I'll research both the MLS and public records -- some times the best comps are private sales that don't show up on the MLS.

Good Luck!

 

[Mike Boyd]

I agree with what Randolph wrote regarding knowing the neighborhood. If it is a standard tract house, I would "know" the value range for that neighborhood. Then I would search for sales that had the same room count and similar square footage. In today's market, I would start the search from $100,000 BELOW that range of prices to $100,000 ABOVE the range prices. In most MLS systems, you MUST have a range of values to search as well as a start and finish date of sale. From that basic search I will get a list of sales that includes room count, square footage and lot size. In my main market area, Santa Rosa, the city is broken down into 4 quadrants. Of course, I will know what quadrant the subject is located in. From that abbreviated list I will print out 6 or 7 of the most recent sales as well as 6 or 7 active listings and pendings. The printouts would be the FULL printouts that I will use in the market analysis. I also print out the abbreviated list for future use which is needed for other parts of the report. After measuring the house, taking photos in and out, drawing the floor plan, etc., I will return to my car and make a brief analysis using the listing printouts and making a brief comparison to the subject.

 

[CANative]

When I was with my mentor the technique used to find the correct comps left me somewhat baffeled as to exactly how this procedure is to get the best comps available. He would research the subject info through the appraisal district web site, search the MLS using the sq ft, year built, and sales within 6 mos if possible, and three to four comps were selected. All of this was done prior to inpsecting the subject, the comps pics were taken at the same time he was in the area to inspect the subject. Is this the proper way to go about selecting comps for a property unseen. Many times the vaule range of the comp search would be from $125,000-$250,000 how would one decide where in this range would the subject fit if the property is not yet seen. I am no longer with my mentor, whats the proper technique to selcet the best comps?

Why is so important to decide where the subject fits in that range before seeing the property? At this point you're just collecting data. Running sale/comps befoe seeing the property is mostly to try and avoid making a second trip to inspect the comps that are actually going to be presented in the report.

 

[Artemis Fowl]

Why is so important to decide where the subject fits in that range before seeing the property? At this point you're just collecting data. Running sale/comps befoe seeing the property is mostly to try and avoid making a second trip to inspect the comps that are actually going to be presented in the report.

Yup.

2nd trips happen...more often than I wish they did.
Pre-selecting a sales sample is an attempt at efficiency. It also helps familiarize me with the neighborhood so when I do sit down to pick my presentation comps...I have a better grasp of the neighborhood.

 

[Kristina Ledesma]

Of late I have been making two trips. Keep getting "unique" properties, for those I'd rather see it first and then pick the most relevant sales. In the long run it does save time and money. I just try to group my next inspection with the comps I have to shoot. Unless I know it is a 'cookie cutter', then I pull a handful of sales to select and shoot after I walk through.

I don't pull by price range, just parameters of likeness to the subject. Many times I end up making several different types of searches, changing parameters, going back further, extending boundries-depending on the property and the data turned up. Also too, in some areas there are multiple boards (sometimes up to five) to contend with and with each board having to perform the same searches over again!

Would sure be nice if there was a statewide MLS.......

 

[cybermenn]

Fannie mae a states in their delclining market statement that a declining market is one in which home prices are currently declining. I also found a statement that clifies further by saying that it has to be two successive declining quarters ...