So this blog came to me when we almost made a BIG Mistake by purchasing a 350K home in Massapequa, Long Island. When I make offers on properties I generally do not need to see them until we have a contract in our Attorney's hand. We use the MLS, Google-Bing Maps, etc to analyze the COMPS, etc. If we went to see every property we put offers in on and we are not in the same ballpark as the seller we would never get anything done and would waste valuable time. And as they say TIME IS MONEY! This was a standard property that we would turn from a Ranch style home into a Colonial. Gut it, Rip off the roof, Raise the ceiling and add a whole nother level on top of the house doubling the square footage. Happens in every suburb throughout the Country. Easy Right-Sometimes!
So we have the contracts at 350K on this house, Based on past experience - Rehab costs around 170K+ and ARV of about 739K+. Not the best deal in town and not the worst deal, but a DEAL. We went to the house after we had the contracts in hand and do our Due Diligence. Walk around the house, take pictures, talk about what we should do and how to reconfigure the house, etc. ►
Now off to drive the comps........This is where this whole BLOG came to thought and I tell you this because I want to educate new investors not to make a mistake like this. NOTE: Always pull comps that are within max a mile, same school district, same style of home or what the style of the home will be after Rehab, Bed and Bath count, square footage and lot size. You can look at many other things but these are the basics.
We arrived at our first comp, second comp, third comp and 4th comp....Nice houses, Really nice house. I looked at my partner, looked down at the listing, looked at my partner, looked down at the listing, looked at my partner, looked down at the listing-----Shook my head, Took my hands and rubbed my eyes, and then looked at my partner again. I know my partner well enough that if he comes to look at a house DO NOT WASTE HIS TIME!!! I call him THE JACKHAMMER. That will be a good story for another Blog. None of these comps look nothing like what the Listing Agent put up on the MLS. Not only did they not look like the pictures-The beds, baths and square footage was definitely incorrect. S^%^%&H^$@*I^$^T....I say. 2 of the listing were the same broker so I called her and had a nice short conversation with her, well not so nice.
OHHHHHHHH she says. We just put pictures up of the model homes this builder uses...The buyers has options to pick a style, etc. But Ms. Brilliant real estate agent - These properties have sold a while ago and all your info is incorrect. We rely on all the agents and brokers for accurate information and she is not a good example. You generally will get these older agents in these fancy towns that have been an agent for 30+ years and are computer illiterate-which obviously was the case with this one.
Below are the COMPS-NOTTTTT
So since these properties above had more square footage, did not look anything like the house we went to see from the listing, etc....I had to call the broker and re-negotiate which didn't go well at all-Well it did not go anywhere as I needed it to be at a purchase price of 300K instead of 350k. I got an earful from him. Why didn't you guys blah, blah, blah and blah and then he hung up. Oh well - I know I should have gone to see the subject property first but it is the name of the game. We don't rehab a couple properties a year-We do volume and VOLUME SPEAKS LOUDER THAN WORDS! It's not the first time this will happen nor will it be the last. But what I have learned is when doing larger rehabs I recommend to not only drive the comps, but call the listing agent before you do - so time is not wasted and hopefully you get accurate info. THE END.......