Using Comps

[HtownFixerUpper]

I'm really new at all this and I have a question about comps.  I have not yet done my first deal, just in the learning stages!!

There is a house I might be interested in bidding on, so I ran the comps for that neighborhood.  I ran all sales for since Jun 02.

Now, do I just take the average price per sq ft and calculate what the home I'm looking at would sell for?  Or is there more to it?

The "subject" house has 1375 sq ft. Here's some of the info:

Sales
2100 sq ft - sold for $59 sq ft (3 days ago)(DOM 40)
2000 sq ft - sold for $61.50 sq ft (Dec)(DOM 145)
1430 sq ft - sold for $58 sq ft (mid Nov)(DOM 44)
1560 sq ft (on same street) - sold for $70 sq ft (early Nov)(DOM 84)
1420 sq ft - $67 sq ft (mid Oct)(DOM 126)
2220 sq ft - $54 sq ft (mid Oct *same day as 1419 sq ft above)(DOM 146)

Active Listings - Listing Prices
1640 sq ft - $61 sq ft
1550 sq ft - $71 sq ft
2775 sq ft - $40 sq ft
2105 sq ft - $59 sq ft
1890 sq ft - $66 sq ft
2010 sq ft - $68 sq ft

Can I assume that the smaller houses sell for a higher $ per sq ft or are those sales at $67 & $70 per sq ft too long ago?  This is a working class neighborhood in the suburbs of Houston.  Any info to help me determine my eventual, after repair, selling price would be so greatly appreciated.  Thanks in advance everyone!!

[Admin]

Htown,

Here's some general guidelines I use and I think you'll find everyone runs comps in their own way.  In other words, ask three experienced agents and you'll still get three different answers.

I think your range is way too broad.  If I were doing comps on 1375 sf, my range would at most be 1250 - 1750 sf.  I typically go just below the target property and have the most room above the target footage.  This ends up with a slightly more conservative per foot number since as you noticed smaller houses typically go for more per foot.

I want the same subdivision.  I want the sales within the last six months, but this depends on the recent market trends.  In times past I've totally discounted sales as recent as three months ago due to dramatic market changes.

It may be worthwhile to drive the comps you do have.  In some neighborhoods values can vary significantly from one street to the next.

Are there enough valid comps to get an average per foot?  Did the sales that took longer go for more?  Did the sellers give 10k back to the buyers in the form of closing costs and allowances?  If the property sold for more than list, this is almost always the case and it's very common.

Active listings are good for a feel of the neighborhood and current activity and expected competition, but don't base values on them.  Have you talked to REALTORS in the area?

Are you comparing apples to apples?  In other words, the same beds, baths, age, composition, curb appeal, etc.

Granted, it's not a science, but if you're making big dollar decisions on this end number, it's comforting to know you're close.

hope that helps...

[HtownFixerUpper]

Tim, thanks so much for your input.

I did a little more research and narrowed my comps to the ones that had 3 bed, 2 bath like my subject property, there were 4.  I found that none were sold with an allowance but the two smaller ones sold for "list".  The other 2 came down $5000 from "list".  It looks to me that the smaller houses are very popular and more easily sold, this may be due to the fact that the neighborhood is working class families with a lower household income.  It looks as if the avg household income for the neighborhood is around $40k.

The neighborhood is nice and well kept and all the other variables are the same for the subject house and the comp houses (other than sq footage). They are within blocks of one another or on the same street. Thank you so much for your help, it really helped me get a better understanding of how to interpret comp data.

[Las Vegas Real Estate]

What I was taught is to pull that 5 most recent sales in that subdivision with the same floor plan and adjust them according to upgrades.