What determines market value?
Raise your hand if you know the answer. Don’t just shout it out like a… shouter. I demand
order in the classroom of Preston Ely.
Anyone? Bueller?
You. In the front. Staring at the screen right now. Reading these words…
Yo, you! What’s the answer?
Okay, I’ll just tell you…
It’s whatever two people agree the value is.
Ain’t that some crazy!? Whatever two people agree that it is. Unfreakinbelievable. I love America. I say you and I go up to D.C., agree that the White House is worth $100 bucks, and flip it for a cool mil.
No, seriously, as we all know, the market value of a house in North America is whatever Zillow says it is.
Stop laughing.
Okay fine, you got me. It’s whatever Zillow says it is… MINUS 20% or so. The 20% variance is what I like to call their “fraudulent enhancement of value in order to generate more illegitimate leads for Realtors” BS.
Enough of this madness. Here’s your 3 easy steps (why does everything have to be in 3s and 7s and be “easy” and “simple” for you to consider reading and buying things?)…
Super-Simple Easy Step #1
Pull the comps using any web-based comparable service besides Zillow. If you come up with a “Zestimate” for the property you have gone wrong somewhere.
Use RealQuest or RedFin – something more legit and accurate.
Super-Simple Easy Step #2
Once you have the list of comps, throw out any comps that are obviously too high or too low. For example, if you have values as follows:
#1 $100,000
#2 $103,000
#3 $4.72
#4 $101,000
#5 $105,000
#6 $11,000,000
You would obviously discard comps 1 through 5 because if you can convince someone that your property is worth the same as #6, you can retire right away with no more worries. This is the American way.
Just kidding. (But not really!)
Discard comps 3 and 6. They don’t match. Now you know why you had to do all those problem-solving things in school. This is where all that work pays off, baby!
Super-Simple Easy Step #3
Write down the addresses to those comps and physically drive out to see both them and the subject property. You will be surprised to see just how often these two groups of properties are absolutely NOTHING ALIKE.
One time, we put a property under contract, and then drove out to see the comps afterward. Two totally different stories. One story is the tale of a neighborhood gone bad. There are railroad tracks involved (on the actual property). The other story involves a really great area that resembles our subject property’s neighborhood.
See, I told ya. It’s just 3 simple steps and some common sense, folks. Get you some.
Say Something
You have a way to determine value that’s better than mine? Yeah right. I dare you to share below.
Do research on a legit site like RedFin to find comps.
Weed out the ‘bad’ comps and compile a list of the ‘good’ ones.
Drive to those ‘good’ comp props to make sure they are similar to your subject property – if not, they are not a real comp.
Preston Ely
is a real estate investor, serial entrepreneur, life coach, musician and philanthropist. CEO of Real Freedom, Inc, one of the most influential internet-based information publishers in the world, owns the largest Anytime Fitness Gym in the United States, is recording a music album with Atlantic Records, sits on the board of Advocates Of Love Orphanage, and has a non-profit charity assisting the poor and oppressed in Cuba with both their physical and spiritual needs.
With over 200,000 subscribers to his email newsletter, he is rapidly fulfilling his mission on earth, which is to glorify God by setting people physically, mentally, financially, and spiritually free through his music and his message of FREEDOM. Preston is 37 years old, lives in Tampa, FL with his wife Ashley, where he spends most of his time reading, writing, and practicing mixed martial arts.