How to Value a Single Family Home
If you’re thinking about selling your home but want to know the value of it first without using a real estate agent, then the video below is for you!
Or if you’re an investor thinking about flipping houses, then you’re probably curious how to determine the value of the homes you want to target for your fix & flip business.
To value a single family house, you must compare it to similar properties within close proximity.
In other words, if your target flipper house has 4 bedrooms, 2 bathrooms, and is roughly 1,500 square feet, then you need to find houses in the neighborhood (close proximity) that sold in the past year to compare value against.
Learn why in this video..
The Typical Family Buyer
To help you understand why we use the comparable value method for analyzing and determining the value of a house, let’s think about it in terms of a family buyer client.
The Johnson Family, for example, loves the Redondo Beach part of Los Angeles. They like this neighborhood area for its proximity to the beaches and it’s distance from the busy highways and downtown of LA.
Their buying criteria happens to be 4 bedrooms, 2 bathrooms, and roughly 1,500 or more square feet to accommodate their growing family.
Since construction companies often built neighborhoods with similar types of houses, odds are there are also multiple homes in your neighborhood that have the 4 bed, 2 bath criteria matching the Johnson Family needs.
And if some of these homes happen to be on the market for sale, well now you’ve got competition!
This is where the fixer upper investor can make his money…improving the property so it appears brand new again after a remodel.
Johnson Family is likely to pay more money to buy your flipper house than buying an outdated one down the road for $30,000 less.
What to Value Your Property For?
Understanding the mindset of your end buyer is important for not only pricing your home but also in determining the renovations that you should do to the property.
You can start off researching active homes for sale that are similar to yours to get a good starting point for value.
If you see they are outdated, then you know you can likely charge more for your flip as a premium for being in better condition and saving a new buyer renovation costs.
But you also want to research sold homes.
These are referred to as “comps” which is short for comparable properties.
Find properties that sold recently that appear to be renovated homes like yours so they are comparable to your flip. Homes with beautiful flooring, beautiful kitchen remodel, and beautiful bathroom remodels.
You’ll quickly understand what prices previous buyers were willing to pay and this will help you feel confident charging a higher price for your flip that nets you bigger profits.
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- Why real estate investing is better than the stock market
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Real Estate Book
How to Analyze a Real Estate Investment Deal (from A to Z)
In this complete guide on real estate investment analysis, you’ll learn about valuing single family homes and multi-family investments as well as house to analyze rental properties, and fix and flips. This eBook also covers the asset market, rental market, and economic market factors that affect the investment so you can determine the future outlook of the investment.
Here is the Chapter Outline:
- Introduction to Real Estate Investment Financial Analysis
- Chapter 1: Advantages of Real Estate Investing
- Chapter 2: Disadvantages of Real Estate Investing
- Chapter 3: How to Value Single Family Homes
- Chapter 4: How to Value Apartment Complexes
- Chapter 5: Analyzing Rental Properties
- Chapter 6: Analyzing a Property to Fix & Flip
- Chapter 7: Investment Decision Rules
- Chapter 8: Analyzing the Asset Market
- Resources Section
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