Posted on: April 27, 2021

Today on the show is Jamil Damji, real estate investor and co-founder of KeyGlee. In this short but jam-packed episode, he’ll explain why you should keep your comps close and use appraiser rules when comping properties. He’ll also cover other things to consider when pulling comps—from property types to seeing things from a buyer’s perspective.

Key Takeaways

  • Look at a property from a satellite view to get a feel of the neighborhood
  • How appraisers estimate the value of a property
  • On build generations
  • Stay within a subdivision (if possible) and see what else has been sold
  • Try to align yourself with the way your buyer thinks

 

RESOURCES:

If you are Ready to Explode Your Wholesaling Business, Click here to Book a Free Strategy Session with me right now!

Subscribe to Wholesaling Inc

Episode Transcription

Speaker 2:
When you look at a house, do you look at the satellite on it?

Speaker 1:
I do.

Speaker 2:
Okay.

Speaker 1:
Yes.

Speaker 2:
Why? Why?

Speaker 1:
I just want to see what’s around it, right? I want to see roof colors. I want to see if I can find traffic lines in the street. I’m trying to get a feel for the hood. Right? When I see the satellite, I can see, oh wow. You know what? It looks like a traffic road on like, you know, the drawing map. When you look at it on satellite, now you realize it’s a freeway, right? On the little picture map you think. Or when it’s like an animated map, you say, oh wow, that looks like a commercial, a commercial building next door. And when you look at it on satellite, it’s a junkyard, its a big difference, right? Big difference between a commercial building and a junkyard. That’s going to take off a tremendous amount, more money on the property.
But what things am I looking for? I’m I love to keep my comps real, real, real, real close, real concentric. And why is that? Because your end buyer is going to very likely get a loan on it, whether or not they sell it to an end user, who’s going to live in it. Or if they’re going to refi it to pull money out, to keep it as a cash flowing property, either of them is going to need to have a lender involved. And if a lender gets involved in a deal, that means an appraiser is getting involved in the deal, which is why I use appraiser rules. When I’m comping my properties, appraisers, won’t go as far out as a mile to find a value. They’re going to want to stay a quarter mile from the property. They’re only going to use properties that are within plus or minus 200 square feet of the subject.
What does that mean? If my subject property is a thousand square feet, I can only use a comp that’s 800 to 1200. If I have a 1400 square foot house, I can’t use that comp because now the dollar per square foot skews out. Right? And so you can only use comps that are plus or minus 200 square feet. In addition to that, you can only use comps or the houses that are built within plus or minus five years of construction. And why is that? Because different build generations use different construction materials.

Speaker 2:
We pulled up the one that was built in 1870 next to houses built like in the last 30 years.

Speaker 1:
Right. Big difference. Right. And I see, and again, it’s a beginner’s mistake and don’t feel bad if you’ve made the error. It’s a normal thing, right. We don’t know.
But for instance, and that rule is going to change in some bill generations like between 1890 to 1930, there wasn’t a lot of building going on.

Speaker 2:
I did the same thing!

Speaker 1:
Right.

Speaker 2:
Didn’t we pull it to 1930?

Speaker 1:
There wasn’t a lot of building going on. So they’re using the same construction materials. It was the same build generation, but between 1990 and 2010, two or three different build generations in there. Right. And so you’re saying, well, Jamil, that’s only 20 years and you went 30, 40 years and you called it the same. Well, that’s because we’ve advanced very rapidly in the last little while. Right? And so you need to understand build generation. And that’s why I like the rule of plus or minus five years. And then once you get into those older houses, you can start to get a little bit more flexible, but I’m not comparing a 1930 build to a 1950 build.

Speaker 2:
Nope.

Speaker 1:
Different stuff

Speaker 2:
different stuff.

Speaker 1:
different stuff.

Speaker 2:
Well, and we’re not going two stories versus one.

Speaker 1:
Exactly, it has to be the same property type.

Speaker 2:
We’re not going multi-family, single family.

Speaker 1:
Exactly, exactly. Flat roof to pitched roof. Oh, that’s a big one. A lot of cities, there was a time when people were building with these flat roofs and then they started doing pitched roofs. And there’s a huge difference in installation, energy efficiency. And that’s why flat roof properties tend to be worth less than pitched roof properties. In addition to that, I don’t want to ever leave my subdivision. Right. If I’m leaving my subdivision, I can almost guarantee there was different building standards, different builder, different architecture.

Speaker 2:
Yeah, different floor plan, different vibe.

Speaker 1:
Completely, so you really want to stay within the subdivision when possible. And what’s a good way to find out because often we can’t see what the subdivision is.
Right. It’s tough. Like, well, I can’t, how am I going to know if this is the same subdivision as that? If you crossed the major road, you probably left the subdivision. Right? That’s the rule. So don’t cross the major road, keep your comps tight to that and you should be okay.

Speaker 2:
So you’ve got, you get an address.

Speaker 1:
Yes, sir.

Speaker 2:
Satellite view it.

Speaker 1:
Yes, sir.

Speaker 2:
What next?

Speaker 1:
So then I’m going to look around at, what’s sold right nearby, right, right nearby. Again, I’m not wanting to go very far. And if you have to go, if your subject properties here, and there’s a bunch of sales, new renovated sales right nearby, but you’re pulling your comp from right over here. That’s gymnastics, in my opinion. All right. You’re basically bending your leg over your head to try to tell a story of value and no one’s going to buy that. When you’ve got better options, right nearby, go with those options. And again, you’re trying to understand the way that your buyer is going to look at this with an objective viewpoint because their dollars and cents are on the line and you should be looking at it the same way. Because if you’re not in alignment with the way that your buyer thinks you’re not going to sell a lot of deals.

Speaker 2:
If you’re interested in joining the most proactive group in real estate investing, it is the TTP program go to wholesalingInc.com/TTP. I personally mentor you. You get my cell phone, we text, we call, it’s crazy, it’s bananas, right? But it’s the truth because I want you to be as successful as possible and I want to work with you and I love you. So if you’re interested in that wholesalingInc.com/TTP, check it out, scroll down, keep scrolling the little scroll things like tiny, because there’s so many testimonials. Nobody, nobody has more testimonials. Check it out. If it feels good in your gut, sign up for a call, till next time, your the best TTP.

Leave a Reply

Your email address will not be published. Required fields are marked *

Wholesaling