7 Steps To Searching For Comps

Today I wanted to talk to you about an important piece of the real estate investing puzzle that a few of our students and subscribers have had questions about – Comparative Market Analysis. You can use these when finding new deals to see if they are in a good area and will sell quickly and for your asking price AND you can use them to figure out what to list your newly rehabbed property at.

My brother Mark is not a real estate agent and he has been very successful in this industry, so I will be sharing with you how he has made it work for him. If you are like Mark and are not a real estate agent, nor working closely with one, one of the best websites for finding and evaluating profitable deals is Zillow.com. The site is a must-have resource for people who do not have access to the MLS.

For example, let's say we are in the market for a home with at least one thousand square feet, two bedrooms with square footage that you can turn into three bedrooms.

Here are the simple steps for running a search and conducting a CMA (Comparative Market Analysis):

Investor Step #1

Set up the search on Zillow.com or on the MLS if you are an agent or are working with one.

• Choose properties for $80K and under.
• Mark the specific zip codes.
• Select 900 square-feet and larger.
• Select 2+ bedrooms (can be converted into 3).
• Select 1+ bath.
• Check the boxes for sale by agent, owner, new homes and foreclosures.

Investor Step #2

Do a search on other sites including: Homesteps.com, Homepath.com and HudHomeStore.com.

Investor Step #3

Check out the photos of the homes and find out what has been sold in the area near the home. Check the values and compare the other homes that have been sold to the listings.

Investor Step #4

Research the price history of the listing; get this information at no cost from title companies or closing attorneys, who will work with you to help you close deals.

Investor Step #5

Conduct CMA – if you see X number of solds, pendings and actives, only pay attention to the “solds” because the prices for the “actives” are often unrealistic and misleading.

• If there aren't enough “solds,” that's when you can check out the “pendings.” Only look at “history sale” or “short sale,” not “pre-foreclosure.”
• Check out the listing history; a property can be listed and not sold with different agents multiple times. It is important to consider a property's DOM (days on market) and compare it with the average in the area. In my area, the average DOM is around four months.

Investor Step #6

Go see the property in person, preferably with a real estate agent.

• Check out the house, drive in the neighborhood, and see what else is for sale in the area. Have a smartphone or laptop with you, so you can have quick and easy access to information you need on any given house you see while out and about.
• Use your real estate agent as a resource. Realtors are especially excited to work with you if you are a cash buyer, so don't be afraid to ask questions.

Investor Step #7

Seek out normal, everyday homes, such as colonials, ranches and splits with 3 bedrooms, 1.5 bath, middle-class price range around $125 to 150K.

• Look for homes with good driveways and decent curb appeal.
• Lot size and year built are not as important.
• Take a mental inventory of the potential construction or rehab process you think a home might need.

Conducting Comps Are Easy

You can save these searches and reopen and run daily to see what is happening in the market. Don't feel like you aren't doing real work because you are doing it online. These days, this is the norm and truly the most effective way to search. In fact, 92% of homebuyers, including both investor and retail, start their searches online.