New realtor intimidated by the comping process

[Newbie Realtor]

Hi all~

I'm a new realtor...got my license strictly for personal use. The broker I have hung my license with is pretty much useless for education in the real estate arena (he is more a loan guy), so I find I am stumped about comping properties I might be interested in.

I've gotten the basics....comps most similar, closest and most recent sales; use square footage, not number of bedrooms; comps no older than 6 mos., 3 is best; use 1/4 mile search but be careful you don't get into an area/subdivision that is not like the subject; use comps that have square footage 200' above and below subject; weed out the unlike ages...

So how DO new agents get a handle on comping properties/determining values? The above seems too simple when considering what you folks do to adjust...how do I do this without becoming an appraiser???

Didn't realize this would end up becoming a stumbling block for me.

Any input greatly appreciated~TIA

 

[Dave Smith]

Find a competent broker!

 

[ccooper]

sounds to me like you've got the general idea. time will give you more experience. you've got the first principle down...ask questions.

the real estate market always changes over time. keeping your eyes and ears open is the only way to truly see what is happening in your market.

you are about to experience a great exodus out of the real estate profession in agents, loan officers and appraisers. get yourself financially stable and just ride the wave (more like trough right now). if you can keep your head above water until the next surge, you'll have the practical experience by then.

 

[Lee Lansford]

...
So how DO new agents get a handle on comping properties/determining values? The above seems too simple when considering what you folks do to adjust...how do I do this without becoming an appraiser???
Any input greatly appreciated~TIA

How?

#1...Experience.
Good experience, not just any experience.

#2...Education.

#3...A variation of #1: Work with someone who is competent and who can assist you until you yourself are competent.

#4...Possess good judgment.

There are no shortcuts.

 

[Ariba]

I'm a new realtor...got my license strictly for personal use. The broker I have hung my license with is pretty much useless for education in the real estate arena (he is more a loan guy), so I find I am stumped about comping properties I might be interested in.

If you are looking for education why did you "hang" your license with broker that is a loan guy and does not know real estate. Why not hang your license with a full service broker that offers education. You might have to pay more to "hang" your license but the education is worth it.

Why do you think appraisers have a requirement of a minimum of two years of internships plus addition education before they are licensed?

 

[GCJim]

Hi all~

I've gotten the basics....comps most similar, closest and most recent sales; use square footage, not number of bedrooms; comps no older than 6 mos., 3 is best; use 1/4 mile search but be careful you don't get into an area/subdivision that is not like the subject; use comps that have square footage 200' above and below subject; weed out the unlike ages...

1.) as above, find a competent broker. There are many to choose from.
2.) From your post it sounds like you have a handle on the basics that Realtors use to perform a 'market analysis' or 'market trend analysis' when attempting to put a LIST PRICE on a piece of real estate. A little practice with these methods should make you feel more comfortable with comping.
3.) If, as you say, you are licensed for yourself (and, I assume, your own real estate investment activity), you may want to develop a professional relationship with an honest, competent, certified appraiser as perhaps, a 'consultant'.

 

[DonRico]

Noob-

I think you're on the right track. You just need to do hundreds, no thousands, of comp searches and you'll see.

Next time you're sitting phone duty at the realtor's office, get on the computer and practice. Pick out one of your office's recent listings and do a comp search on it. It would be good basic market research, getting to know your market area.

Look for recent sales similar to your subject listing (don't use a ranch as a comp for a colonial). Find sales that are similar in Gross Living Area (though 200 sq ft bracketing seems to be an arbitrary number). The Effective Age is as important as the Actual Age. Depending on the density of your market area, the distance from Subject to Comps is also variable.

Unless you're in a development with similar model homes all up and down the block, you're probably not going to find an exact match. This is where any adjustments come in to play. All of this practice will show you what the typical buyer is willing to pay for extra GLA or lot size. How much is the extra utility of a half bath on Level One worth to Joe Buyer? How much is a feature like In-Ground Pool or 3-bay garage worth?

Practice, Practice, Practice....

 

[DesertDiva]

Afraid I must agree this time. Whomever gave you this info on how to do a CMA is way off.

it isn't really that simple. Take the distance issue for ex, is the area rural, suburban or urban? There are lots of variables in any market that have to be adjusted for in setting a selling price. I would never use a flat # of sq ft, but rather a %.

It's important to learn this the right way. If you miscalculate you risk either leading your clients to sell to low (inviting litigation later when they figure it out) or having it sit on the market forever with no interest & a really ticked off seller.

 

[Non Sequitur]

Newbie, the first thing to remember: not all sales are comp's. With this in mind choosing comp's isn't a mechanical process like, i.e. Zillow. Most of knowing what a comp is is knowing the real estate market. Eventually you'll get a feeling for what buyers want and what they consider similar when looking at properties. After all, what we do is interpret the actions of buyers.

For now, assuming you have access to a MLS, every morning and evening look at the solds. Look at the photo's, did the property sell at or near listing price, any seller paid concessions/creative financing, pay attention to the days on market and in general read over the listing sheet for things like renovated, TLC, fixer upper, etc. You'll start to get an idea of what the market is doing. Also pick a neighborhood that interests you; it could be your own, the area you grew up in or the dream place you'd like to move to. Pull all of the listings, pay particular attention to the ones under contract. Then pull all of the sales for the prior year. Read everything I mentioned before, compare the solds with the under contract's then the active listing's. You'll start to see pattern's in prices, locations, amenities, etc. Then choose a listing by random and try to pair it with what you think are similar sold properties. If you choose correctly the things you learned by looking at the solds as a whole should help you determine appropriate adjustments for any differences.

One last thing: don't expect perfect. Even in a cookie cutter subdivision with many model matches there will be variation's in the data that sometimes can be explained but many times not. It's the nature of sales. Three model matches with the same amenities are listed at the same price doesn't mean they sell for the same price, same days on market, same concessions, etc.

 

[Marcia Langley]

Hi all~

I'm a new realtor...got my license strictly for personal use. The broker I have hung my license with is pretty much useless for education in the real estate arena (he is more a loan guy), so I find I am stumped about comping properties I might be interested in.

I've gotten the basics....comps most similar, closest and most recent sales; use square footage, not number of bedrooms; comps no older than 6 mos., 3 is best; use 1/4 mile search but be careful you don't get into an area/subdivision that is not like the subject; use comps that have square footage 200' above and below subject; weed out the unlike ages...

So how DO new agents get a handle on comping properties/determining values? The above seems too simple when considering what you folks do to adjust...how do I do this without becoming an appraiser???

Didn't realize this would end up becoming a stumbling block for me.

Any input greatly appreciated~TIA

Newbie,

I agree with the others that many hours of researching actual sold propertis in the MLS is the only way to get a handle on prices in your market. You can focus on the areas and property types that you are interested in investing in. But you do need some guidance from an experienced RE agent or broker.

As a start, make sure you take every class/siminar available for using your MLS. If you don't know how to properly utilize all the tools in MLS it can skew your data.

Since you say your RE license is only for your own use and your broker is really more of a "loan guy", I worry that you are going to be influenced to make some investing mistakes. Be careful.