Online Valuation Sites
I know my next piece will be at odds with what a lot of investors believe, but there are good, valuable resources on the internet to help you ascertain value. They are useful IF you put them in context of all that I’ve mentioned, and don’t try to use them as a substitute for something like a true appraisal. Sites like www.zillow.com can be inaccurate, and they have their limitations. But, don’t overlook their usefulness in giving you ballpark information…just don’t rely upon them for professional opinion. As of now there is nothing available online, free, paid, or otherwise that substitutes for a professionally-crafted appraisal where an individual is scrutinizing the property face-to-face. It just doesn’t exist.
With that caveat, I’ll recommend four valuation sites:
www.zillow.com is the most widely known, and probably the site that gets the most criticism. But, if you understand it’s an estimator, and doesn’t replace a true appraisal, it’s a very useful tool. One thing that’s really useful for the remote investor are the birds-eye views that allow you to look at the property from a satellite photo, and see the surrounding area. I’ve come across more than one property in Arizona that otherwise looked good, but ended up backing up to a highway – or worse, a junkyard, which I caught on the Zillow aerial view.
www.domania.com by lending tree is another good site. The free “solds” listing is really a good tool. And, for $30 you can get a reasonably complete property report that borders on being an appraisal, or can be automatically put with a realtor to get comps.
www.Cyberhomes.com by Fidelity is another really good tool. What’s particularly helpful with this site is the valuation map which gets pulled up automatically when you input data. So, not only do you see estimates for the property in question, but also for all the adjacent houses as well.
The national real estate firm of Coldwell Banker (www.coldwellbanker.com) has a good valuation tool, and a unique “Live Market Data” interactive map where you can zoom in to an area and it will pull up the listings for sale in that map coordinate. It’s a fantastic visual way of seeing what’s going on in an area and its surrounds. Trulia (www.trulia.com) is a similar service.
Also, if you are not using something like Zillow or Cyberhomes which provide a map, Google’s satellite map tool is really useful for getting arial views. That helps with locating the unit in its environs. For example, you can see where a house is located in proximity to a community lake or whether it backs up to a freeway.
All of these recent blog entries on valuation are a lot to consider - if you have any questions, email me at william@thecoasttocoastinvestor.com and I can help you with anything or answer any questions you have.
My next series of blog entries is going to be absolutely vital for you - they are about property financing, and given the current credit situation in the country, you need to learn how to finance properties using traditional and creative means. Financing is the one thing that is going to make or break deals over the next couple of years, so you'll want to get these postings.
So, until next time, I’m Bill Flood; this is the Coast to Coast Real Estate Investor…live your real estate dreams!
Tuesday, January 22, 2008
Wednesday, January 9, 2008
Valuing Property Remotely (Part 3)
Local Auditor Sites
Local auditor sites are very helpful. In many counties and municipalities across the country the local property tax auditor’s information is online and available for public access. Now, you have to understand that what you see on an auditor’s site might require some interpretation. A tax assessment is different from an appraised value (assessments are typically lower), and auditor’s values have a reputation for being inaccurate. But, it’s still good data, and if you learn how assessed value is computed, it can provide you with at least a reasonable figure for comparison. What’s even more valuable, though, is if the auditor provides the prices at which units have sold. For example, here in Columbus, our auditor goes back the last 3 or 4 transactions, so we can accurately see what people paid for a property. That can be amazingly helpful when you are crafting an offer, particularly if a bank foreclosure is involved.
Another area where certain auditor’s software is tremendously helpful is when they’ll map values or sold prices. Again, here in Central Ohio, we’re blessed with a system that will do that. I can pull up a neighborhood map that will show each lot, what it’s assessed value it, what it last sold for and when. You can do your own comps that way, really easily!
Title Company Reports
Title Companies can often provide a property abstract free of charge that will provide you with information about assessed value (most of it will come right from the auditor’s site) as well as any liens on the property. How can this be useful? Let’s say you know a property is an estate sale, and is worth $150,000 with an existing loan that has only $40,000 remaining. That situation could be ripe for an aggressive price because there’s lots of equity, or potential owner financing. If you found out it had a loan of $149,000 it’s a different situation.
Now, title companies will not wantonly give out preliminary property reports for free. You have to be very much a two way street – start by meeting with them and finding the one that you’d do your business with. See if they can easily produce this kind of information for you and would be willing to do so if you committed to them being your title company. And, don’t overdo it. You don’t send 15 properties to a title company for their reporting. You check on the one or two that really interest you enough to put a contract on. Additionally, the more business you send their way in the form of closings and referrals, the more they will be willing to reciprocate by running quick reports for you!
Appraisals
Appraisals, of course, are the best option, but appraisals cost money. Nothing substitutes for a hand-crafted, professionally addressed appraisal. Those run anywhere from about $200 to about $400 for a residential property. So, if you are really serious about a property, you might want to consider ordering an appraisal (and will have to pay for one if a bank loan is involved). It’s money well-spent if you want to know what a property should really be worth and to utilize that data in your negotiations on price. Three hundred dollars invested in an appraisal is a bargain if you manage to get a $300,000 house for $240,000.
There are a handful of sites that will do "appraisals" online running in the area of approximately $50. I don't place a tremendous value in these, because they are primarily relying on the same kinds of data I'm describing to you in these blogs on property valuation. Sure, they will save you some time, and they may get you data you could not normally access. In that sense they provide a good service. But they are not, in fact, full appraisals, so don't get suckered into thinking they are. Nothing substitutes for a real person going to the property and inspecting it inside and out to see what's really going on. Keep in mind a simple issue -- a property's condition will blatently influence its value, and no online service can uncover that; it's something that a real person needs to do.
Until next time, I’m Bill Flood; this is the Coast to Coast Real Estate Investor…live your real estate dreams!
Local auditor sites are very helpful. In many counties and municipalities across the country the local property tax auditor’s information is online and available for public access. Now, you have to understand that what you see on an auditor’s site might require some interpretation. A tax assessment is different from an appraised value (assessments are typically lower), and auditor’s values have a reputation for being inaccurate. But, it’s still good data, and if you learn how assessed value is computed, it can provide you with at least a reasonable figure for comparison. What’s even more valuable, though, is if the auditor provides the prices at which units have sold. For example, here in Columbus, our auditor goes back the last 3 or 4 transactions, so we can accurately see what people paid for a property. That can be amazingly helpful when you are crafting an offer, particularly if a bank foreclosure is involved.
Another area where certain auditor’s software is tremendously helpful is when they’ll map values or sold prices. Again, here in Central Ohio, we’re blessed with a system that will do that. I can pull up a neighborhood map that will show each lot, what it’s assessed value it, what it last sold for and when. You can do your own comps that way, really easily!
Title Company Reports
Title Companies can often provide a property abstract free of charge that will provide you with information about assessed value (most of it will come right from the auditor’s site) as well as any liens on the property. How can this be useful? Let’s say you know a property is an estate sale, and is worth $150,000 with an existing loan that has only $40,000 remaining. That situation could be ripe for an aggressive price because there’s lots of equity, or potential owner financing. If you found out it had a loan of $149,000 it’s a different situation.
Now, title companies will not wantonly give out preliminary property reports for free. You have to be very much a two way street – start by meeting with them and finding the one that you’d do your business with. See if they can easily produce this kind of information for you and would be willing to do so if you committed to them being your title company. And, don’t overdo it. You don’t send 15 properties to a title company for their reporting. You check on the one or two that really interest you enough to put a contract on. Additionally, the more business you send their way in the form of closings and referrals, the more they will be willing to reciprocate by running quick reports for you!
Appraisals
Appraisals, of course, are the best option, but appraisals cost money. Nothing substitutes for a hand-crafted, professionally addressed appraisal. Those run anywhere from about $200 to about $400 for a residential property. So, if you are really serious about a property, you might want to consider ordering an appraisal (and will have to pay for one if a bank loan is involved). It’s money well-spent if you want to know what a property should really be worth and to utilize that data in your negotiations on price. Three hundred dollars invested in an appraisal is a bargain if you manage to get a $300,000 house for $240,000.
There are a handful of sites that will do "appraisals" online running in the area of approximately $50. I don't place a tremendous value in these, because they are primarily relying on the same kinds of data I'm describing to you in these blogs on property valuation. Sure, they will save you some time, and they may get you data you could not normally access. In that sense they provide a good service. But they are not, in fact, full appraisals, so don't get suckered into thinking they are. Nothing substitutes for a real person going to the property and inspecting it inside and out to see what's really going on. Keep in mind a simple issue -- a property's condition will blatently influence its value, and no online service can uncover that; it's something that a real person needs to do.
Until next time, I’m Bill Flood; this is the Coast to Coast Real Estate Investor…live your real estate dreams!
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