Follow the specific steps laid out below to determine if the property is a deal worth pursuing. We can offer assistance in evaluating the deal and these are all items that we need to have and review in order to assist you in further assessing the deal:
- Seller lead sheet
- Zillow detail page
- Old or present listing page
- MLS comps
- Repair estimate sheet
- Pictures (Interior/exterior, rooms, systems, any and all damage)
- Contract (If this has been written or what you may be thinking of writing up)
- Tax records (How many times it’s sold, what it sold for last, who owns it, etc.)
Seller Lead Sheet
Make sure that you obtain all necessary contact information, note the lead source that the lead was obtained from (Bandit sign, website, other advertising?).
Just remember when utilizing Zillow (www.zillow.com) it is roughly 10 to 15 percent off in pricing (either over or under) but it will give you a good basis to start out with. This will give you a good idea when looking at the “Zestimate” which is an average of other homes sold within the neighborhood. It’s a free service and helps in evaluating the overall deal, especially when you are in the early lead stages. A lot of times Zillow will pull information off of the MLS from a previous listing, which is helpful as well.
Old or Present Listing Page
A listing page will provide you with most of the information that you need to know about the property. Such items include: the price, features and square footage, taxes, utility information and other important items.
This is why it is important to have access to the MLS. If you have a good relationship with an agent then they can usually get an assistant login to the MLS for free. Compare square footage, year built, bedrooms, bathrooms, if it has ever been renovated, days on market (DOM), as is or retail property and the location of comparable properties (how close in proximity are they to the subject property).
Repair Estimate Sheet
This is used in evaluating damage and estimating repair costs. Make sure to do a thorough walk through with your repair sheet, tape measure and flash light in hand. Look for all the little tell-tale signs of items that could be in need of repair like foundation cracks, water stains on the drywall, cracks in the corners of the doorways and stains around the drain in the basement floor- these can all be signs of larger structural problems. Make sure to take pictures of all the damage to show contractors and add to your scope of work. Always add on at least 20 percent to the total of your repair estimate to cover unforeseen repairs. If you are uncomfortable evaluating repairs alone, it may be best to take a contractor along with you. The contractor shouldn’t have a problem if you’re going to give them the work. This is a great way to gain some knowledge of the construction process and learn how to better estimate repairs on your own in the future.
When taking pictures make sure to include at least one of each of the following:
- Exterior (Front, back and sides)
- Systems (Plumbing, electrical, hot water heater, furnace, A/C, etc.)
- Damage: Take photos of the specific damage. Examples include: paneling, mold, flooring issues, doors that need repair, fence, light fixtures, cabinets, etc. If there is a hole in the wall, take a picture of it! You can’t take enough pictures.
You may or may not have this to provide to us to evaluate the deal. If you have not written up an offer then please provide the specific details that you are thinking of putting in the offer so that we may be able to provide you with any feedback from our experiences.
These typically list characteristics of the house (bedrooms, bathrooms and square footage) as assessed. It also will show the last market sale and sales history. Pay attention to what year it sold and how much it sold for. Tax records are a great way to help you to better establish the worth of the property. Dependent on the county and how often they assess (update information about the property and value); this may or may not help you to establish a good price estimate for fair market value of the property.
Congratulations, if you have followed all of the above steps outlined then you have completed a deal evaluation package! This is essential to evaluating the property for purchase and a key aspect in helping to create your success as an investor by analyzing and making the right decision as to whether to purchase the property or not.