Understanding of Property Evaluation by Private Money Loans Arizona
Understanding of Property Evaluation by Private Money Loans Arizona
Welcome to Real Estate Investing. Today, we are brought to you by private money loans arizona. My name is Ryan Wright and thank you for joining me today. Today I want to talk to you little bit about evaluating a property. When you are evaluating a property as to what the value of the property is? You need to be aware of something, which many people overlook and i.e. the active homes, homes that are currently for sale. You may wonder why active homes are so important. Well, every body looks at the sold, sold comparables and what did home sell for?
Now it is really important to realize that sold homes talk about the history and active homes talk about the future. You see, when you are looking active you are looking into future and you can have active homes that are priced higher than the sold properties and you can have active homes that are priced lower than the sold properties. So if the actives have a downward trend as compared to the sold properties, you are going to know that properties are going to sell for less than what the sold properties went for or if you have a trend upwards in the active, you may have property values that are increasing. However, you do not actually know that because no one has purchased the property yet. You are basically looking at and is trying to make a determination as to if the property values are increasing or if the person is just overpriced for what they got the home listed for.
So it is really important when you are evaluating properties. We like to look at three actives and three sold comparables. When you are looking at these active and solds you are trying to determine if the actives are overpriced or if they are priced well and market is trending upwards or the market is trending downwards. This is possible only because of the sold comparables and appraisers commonly use sold comparables. They do not ever use active because the justification is that the actives have not sold yet so you do not really know what the true value is.
But let's say, you have a sold home for a $100,000, another for $110,000 and another for $105,000. So, you will have comparables ranging from a $100-110,000. And let's say that an appraisal is going to come in as long as similar property, similar neighborhoods and an appraiser is going to come in somewhere around 100-110. But lets say, that there are active properties that are selling somewhere between $90-97000. There is great justification as to why a property isn't going to sell for over $100,000 if you have active properties, properties that are on the market. So you have to look at the things from buyer's perspective.
What else a buyer is going to be looking at, if they are looking at your property? If there are other properties that are comparables, that are in the same neighborhood, that have less money than what the solds have looked at or the solds have sell for, then you are going to have a difficult time or I would say an impossible time selling the property for more than what the other competing homes are selling for. The other thing you have to take into consideration is what those active homes are really going to sell for. Are they priced wonderfully or are they priced too high thus meaning that market is deteriorating even more.
If you find out that information is useful, if you just find out how long the property has been sale can be useful. The other things you can do is simply call the real estate agent that has it listed and ask them how the showing has been, do you think it is priced right? Do you think it is going to sell in that neighborhood? Lots of situations give great information from the real estate agents as you talk to them about property.
So thanks for joining me. This is Real State Investing Today brought to you by arizona private money loans. Happy Investing.