Determining a property’s value can be an important step when buying your first investment property depending on your real estate investing strategy and why you’re buying the property.
By reviewing comparable sales, or “comps,” you can get a clearer picture of what similar properties have sold for, helping you make more informed decisions.
Here’s how to do that.
Why Comparable Sales to Determine Value
When you’re buying your first investment property, it’s important to understand the value of the property before making an offer. One of the best ways to do this is by reviewing comparable sales, or “comps.” Comps show you what similar properties in the area have recently sold for, giving you a sense of whether the property you’re looking at is priced fairly.
- What Is a Property Worth? – You need to know if you’re paying a fair price. If you’re buying, are you paying too much? If you’re selling, are you getting enough?
- How Do You Know? – Look at recent sales of similar properties to see if the price is right. This helps you avoid overpaying or offering too little.
- Compare Apples to Apples – Don’t compare a small, old house to a large, new one. For a good comparison, the properties need to be similar in size, condition, and location.
- Identical Properties Should Sell for Similar Prices – If two properties are the same in every way, you’d expect them to sell for about the same price. But if a property has different features or is in a different area, the price could vary.
- What Makes Properties Comparable? – To determine if a property is comparable, look at things like the number of bedrooms and bathrooms, square footage, year built, and location.
Property Info Comparable Sales Data
Not all properties are the same, so it’s important to focus on specific factors that will help you find the right comps. By looking at data from properties that are similar in key areas, you can get a clearer picture of the property’s market value.
Here are the factors to consider when comparing properties:
- Same or Very Similar Area or Location – The closer the properties are in location, the more relevant the comparison will be.
- Same or Very Similar Beds/Baths – The number of bedrooms and bathrooms should be consistent across the properties you compare.
- Similar Year Built – Homes built in the same era tend to have similar construction materials and styles, which impacts value.
- Similar Square Footage – Prefer comparing Above Grade Finished Square Footage (AGFSF) to AGFSF for consistency.
- Make Adjustments for Unfinished Areas or Basements – Finished basements and unfinished spaces need to be factored in separately.
- Make Adjustments for Slight Differences in Square Footage by Using Price per Square Foot – Use price per square foot to account for small differences, but consider adjusting for land value separately if needed.
- Similar Lot Size and Zoning of Lot – Make sure the lot size and zoning regulations match, as these can influence the property’s potential use and value.
- Similar Style of Property – Compare like with like; for instance, a stick-built house should be compared to another stick-built house, not a condo or mobile home.
- Similar Condition – The condition of the property matters. A home in good condition should be compared to others in good condition, not fixer-uppers.
- Similar Extras and Amenities – Features like garages, pools, or fireplaces should be factored in to ensure a fair comparison between properties.
Most Important Factors for Comps
Certain factors carry more weight than others.
These factors help ensure that the properties you compare give you an accurate reflection of the market value for the property you’re considering.
The three most important factors are location, date of sale, and size.
- Location of Property – Location is one of the biggest influences on property value. Even within the same city, values can differ significantly based on the neighborhood, school district, or proximity to amenities like parks and shopping. A property in a desirable area will usually be worth more than a similar property in a less attractive location. This is why comparing properties that are in the same or very similar locations is key.
- Date of Sale – The market can shift quickly, so it’s important to look at sales that are as recent as possible. A property sold six months ago may not reflect current market conditions, especially in a fluctuating market. The more recent the sale, the more reliable the comparison. Prices could rise or fall depending on supply and demand, making recent sales data critical.
- Size of Property – Size, including square footage, directly impacts value. Larger homes generally sell for more, but only if you’re comparing properties that are otherwise similar. You should compare homes within a 10-20% size range of the property you’re evaluating. This ensures that you’re looking at properties that offer a similar living experience and potential rental income, which is especially important for an investor.
Finding Comparable Sales
Finding the right comparable sales (comps) is essential.
Comps are recent sales of similar properties, and they give you a baseline for what the property you’re considering might be worth.
You’ll need to balance between sold properties and those that are currently active on the market, but sold comps are generally more reliable for pricing.
Here are some things to keep in mind when finding comps:
- Sold Comps Versus Active Comps – Sold comps provide a clearer picture of what properties are actually worth, as they represent real transactions. Active listings show asking prices, but these may not reflect the actual market value.
- Sold as Close to Current Date as Possible – Look for comps that have sold recently to capture current market conditions. Sales from six months ago may not be relevant if the market has shifted.
- Want to Look at Both – It’s helpful to see active comps too, as these show your current competition. However, sold comps should weigh more in your analysis.
- Want to See About Half a Dozen – Ideally, find at least five or six solid comps to give you a range of what the property might sell for. This helps smooth out any outliers.
- Same Number of Beds and Baths (Ideally) – Try to find comps with the same number of bedrooms and bathrooms as the property you’re evaluating. These key features impact both the property’s marketability and value. If you compare properties with different numbers of bedrooms or bathrooms, you may end up with skewed results.
Square Footage
When you’re evaluating a property for investment, square footage is a critical factor in determining its value. The size of the home affects both the sales price and the potential rental income, so it’s important to get this right. You’ll want to make sure that the properties you compare are similar in size to the one you’re considering.
Here are some key things to keep in mind when comparing square footage:
- Square Footage +/- 10% to 20% – Ideally, the comparable properties should be within 10% to 20% of the square footage of the property you’re evaluating. This helps you compare homes that offer a similar living experience.
- Or, Determine a Dollar per Square Foot of Your Best Comparable Sold Properties – Another way to approach this is by looking at the price per square foot of comparable properties that have recently sold.
- Remove High and Low, Especially if They’re Outliers – Take out any extreme values that don’t reflect the general market trends. These outliers can throw off your calculations.
- Use Average to Determine Value of Your Subject Property Based on the Average – Once you’ve removed the outliers, calculate the average dollar per square foot. Multiply this by the square footage of the property you’re considering to get an estimated value.
- Some Websites Can Also Provide Average Dollar per Square Foot to Do Quick Estimates – Several online platforms, like Zillow or Redfin, offer tools that give you the average dollar per square foot for properties in a specific area. While this can be helpful for a quick estimate, it’s always better to double-check the comps yourself to ensure accuracy.
Proximity
When you’re determining property value, proximity is one of the most important factors in finding accurate comps.
The closer the comparable properties are to the one you’re considering, the better.
However, sometimes you’ll need to expand your search if there aren’t enough similar properties nearby.
Here’s how you should approach proximity when looking for comps:
- Go Out from the Subject Property if You Need More Comparable Sales – Start by looking as close to the subject property as possible. If there aren’t enough comps, gradually widen your search area.
- Same Neighborhood or Subdivision – Ideally, you want comps from the same neighborhood or subdivision. Properties in the same development tend to have similar values. If that doesn’t provide enough comps, expand your search while still applying the other criteria.
- Include Nearby Neighborhood or Subdivision – If Similar – Nearby neighborhoods can work if they have similar characteristics, like home styles, lot sizes, and amenities. Avoid using comps from neighborhoods that are drastically different in terms of price, style, or amenities, as this can skew your analysis.
- Radius Around Property – You can expand the radius around the property if needed. Start with a quarter-mile radius and increase it until you find enough comps, but try to stay as close as possible.
- By Same Zip Code – If expanding the radius doesn’t yield enough results, you can include comps from the same zip code. However, be cautious of large zip codes that cover very different areas.
- By Same City – As a last resort, you can look at comps from the same city. But remember, neighborhoods within the same city can vary widely in terms of value, so this approach should only be used when you’re struggling to find comps that meet all your criteria.
Property Type or Style
The type or style of the property plays a big role.
Different property types can have drastically different values, and comparing properties of the same style helps you get a more accurate estimate.
You wouldn’t compare a single-family home to a commercial property, just like you—in an ideal world with ample comparable sales—wouldn’t compare a ranch-style home to a tri-level.
If you can’t find comparable sales of the same property type, you can utilize different styles, but your confidence in that value should be lower.
Here’s what to keep in mind when looking at property type or style:
- Single Family Home Versus Commercial – A single-family home should only be compared to other residential properties, not commercial buildings. These markets operate differently and have unique valuation factors.
- Stick Built, Manufactured Home, Condo, Townhouse – Make sure you’re comparing similar construction types. A stick-built home, which is built on-site, is valued differently than a manufactured home, which is pre-built and moved to the site. Similarly, condos and townhouses have their own market dynamics.
- Ranch, Raised Ranch – A ranch-style home is typically a single-story property, while a raised ranch has an entryway between two floors. Compare these types to others with the same layout, as they have different appeal and pricing.
- Bi-Level or Tri-Level – Bi-level homes have two distinct levels, while tri-levels have three. Comparing these property types to each other helps ensure you’re evaluating properties with a similar amount of usable space and layout.
- Brick, Siding – The exterior material of the home can affect its value as well. Brick homes generally have higher maintenance and energy efficiency benefits, so they might be valued differently than homes with siding. Make sure to account for these differences when comparing.
These are just a few examples of the different property types and styles you might encounter. In reality, there are many more variations and nuances to consider.
As a real estate investor, your goal should be to find comparable properties that match as closely as possible to the one you’re evaluating.
The more similar your comps are to your target property, the more accurate your valuation is likely to be.
Age of Property
When you’re evaluating the age of a property, it’s important to consider both the year built and the effective year built.
A property may have been built decades ago, but if it’s been fully or partially rehabbed, the effective year built could be much more recent.
This is key for real estate investors because properties with significant updates may function and look like newer homes, but the MLS will still show the original year built. That’s the data you’ll typically use to search for comps, even if it doesn’t reflect the property’s current condition.
When comparing properties by age, here’s how to approach it:
- Recently Built Properties – For homes built in recent years, you can compare them to other properties built within a few years on either side.
- Few Years on Either Side – For example, if the property was built in 2008, you might look at properties built from 2005 to 2011. This keeps the comparisons relevant to homes of similar construction quality and design trends.
- Couple Decades Old – For homes that are a bit older, widen the range to about a decade on either side.
- Use About a Decade – For a property built in 1990, compare it to homes built between 1985 and 1995. Homes from the same era tend to have similar materials and layouts.
- Many Decades Old – For much older homes, use a wider range. Include homes from a decade or two newer, but also look at properties that are even older.
- Use a Decade or Two Newer as an Upper Range and Include All Properties Older – For a property built in 1942, you might compare it to homes built through 1960, but also include those built earlier. This ensures you’re looking at homes that have similar historical characteristics while accounting for potential updates.
Select Your Best Comparables
When selecting the best comparable sales for evaluating your first investment property, you’re aiming to get down to about half a dozen comps.
An appraiser typically uses three to five comparable sales in an official appraisal, and you’ll want to be just as selective. But how do you choose the best comps for your analysis? The key is to filter through several factors to ensure you’re comparing properties that are most similar to the one you’re looking at.
Here are the main factors to help you filter and select the best comps, roughly in order of importance:
- Beds/Baths – Start by matching the number of bedrooms and bathrooms as closely as possible. These are essential features that directly impact a property’s value and its appeal to renters or buyers.
- Garages – A garage can add significant value, so try to compare properties that have similar garage setups. Whether it’s a one-car, two-car, or no garage, this is an important factor to align.
- Square Feet – Keep your comparables within 10-20% of the subject property’s square footage. This helps ensure you’re looking at homes with similar living space and layouts.
- Proximity – Ideally, the comps should be from the same neighborhood or subdivision. If you need to expand your search, look at nearby areas that are similar in characteristics.
- Age – Compare properties that were built around the same time. Homes built in different decades may have different construction quality, materials, and design, which affects value.
- Type, Style, Amenities – Make sure you’re comparing properties with the same structure type and style. For example, a ranch-style home should be compared to other ranch-style homes, not a two-story or bi-level.
- Recency of Sales – Lastly, focus on sales that are as recent as possible. The market can change quickly, so comps that sold months or even years ago might not reflect the current market conditions accurately.
By applying these filters, you can confidently narrow down your list of comparable sales to the most relevant properties, giving you a strong foundation for determining the property’s value.
Your Current Competition: Actives
You also need to pay attention to your current competition—the properties that are actively for sale.
Understanding what’s available on the market right now can help you gauge how your property fits in and how competitive it is compared to others.
This is especially important when setting an offer price (or planning your rental rates).
Here are a few key things to consider when looking at your active competition:
- What’s for Sale Right Now? – Look at properties that are currently listed for sale in the same area. These act as competition for buyers, so it’s important to compare your potential investment to what’s already on the market. We’ll talk more about this in a moment when we talk about buyer’s eyes.
- Same or Very Similar Criteria for What’s Sold – When analyzing active listings, use the same criteria you would for sold comps. Look for similar properties in terms of beds, baths, square footage, and condition. If a buyer is looking for a certain type or property, what would your property be grouped with as possible candidates to see?
- MLS is Probably Your Best Source – The Multiple Listing Service (MLS) will give you the detailed information you need to compare properties, including price history and listing dates.
- Days On Market – Pay attention to how long a property has been listed. Be cautious, though, as some properties may have been relisted to reset their “days on market” count. Always check if the property was previously listed but didn’t sell to get a true sense of how long it’s been on the market.
- Absorption Rate – This measures how quickly homes are selling in a given area. It’s calculated by dividing the number of homes sold in a given time period by the total number of available homes. For example, if 10 homes sold in the last month out of 100 available homes, the absorption rate would be 10%. It’s a good indicator of demand. A higher absorption rate means homes are selling faster, which could suggest a competitive market. A lower rate means homes are sitting on the market longer, which may indicate less demand or overpricing.
Asking Price Versus Sold Price
It’s essential to understand the difference between the asking price and the sold price.
Here are some things to keep in mind about asking price versus sold price:
- Asking Price is Not Sold Price – Be careful not to assume the asking price is the property’s value. Some properties never sell at their initial asking price and require price reductions to attract buyers.
- Some Properties Accept Offers Significantly Below Asking Price – The asking price is not always the final sale price. In many cases, properties accept offers much lower than their asking price. The true value of the property is reflected in the sold price, not what the seller originally hoped to get.
- Fantasy Land (Asking Price) Versus Reality (Sold Price) – Until a property sells, it’s living in “fantasy land.” The asking price is just what the seller wishes for, but the sold price represents the real-world value. The actual transaction price is what matters when determining a property’s value.
- What is the Trend? – Some websites offer data over time showing the trend between asking and sold prices. You can see whether properties in a certain area tend to sell above or below asking price, giving you a clearer idea of current market conditions.
By focusing on sold prices, not just asking prices, you can make a more informed decision about the true value of the property you’re looking to invest in.
Why Get Access To MLS
Getting access to the MLS (Multiple Listing Service) can be incredibly valuable for real estate investors when determining property values.
The MLS provides comprehensive data on both active and sold properties, which can help you make more informed decisions.
If you don’t have direct access, you’ll want to work closely with your real estate agent, who can provide this data as part of their service to you.
Here are some of what the MLS can provide to your as a real estate investor:
- Sold Data for Comps – MLS provides detailed information on sold properties, which is crucial for finding the best comparable sales to assess property value accurately.
- Active Data for Comps and Finding New Deals – You can also use the MLS to see active listings, giving you insight into current competition and potentially uncovering new investment opportunities.
- Manually Entered Full Property Information – Unlike some other real estate platforms, MLS data is manually entered by agents and often more reliable. It includes specific details that may not be available in tax records.
- MLS History of Properties from Previous Sales and Listings – The MLS allows you to see a property’s full history, including when it was listed, withdrawn, or sold. You can track price changes over time, as well as the historical descriptions and comments made by agents in previous listings.
- Mailing Lists – MLS also provides access to property owner mailing lists, which can be useful for direct marketing and outreach if you’re looking for off-market deals.
Warning: Lack Of Comparable Sales
When you’re evaluating a property and struggling to find comparable sales, that’s a big warning sign.
The lack of similar properties that have recently sold can make it harder to determine the true market value of the property you’re considering.
Here are a few things to keep in mind if you can’t find enough comps:
- Not Finding Properties That Are Similar That Have Sold? – If there’s a lack of comparable sales, it means you’re missing the sold data to accurately assess the property’s value. This makes your estimate of value much less certain.
- Be Very Careful – In this scenario, you should proceed with caution. Without enough comps, you’re making more of a guess than an informed decision, which can lead to overpaying or facing future issues.
- Consider Being More Conservative in Offers – When you don’t have enough data, it’s often wise to offer less unless you are making your decision based on the income (and associated returns) on the property.
- Control Without Risk – If you’re unsure of the value, consider controlling the property without committing fully. Options or lease-options can give you control over the property while limiting your risk. This way, you can step back if the market doesn’t support the price or if you find the property is worth less than expected.
Value of Upgrades
When determining a property’s value, upgrades like a new roof or windows can seem significant, but it’s important to understand how they impact the overall price.
As an investor, you may wonder if putting $10,000 into a new roof increases the home’s value by $10,000. The short answer? Probably not.
It’s unlikely that the property’s value will increase by the full cost of the upgrade. While a new roof might add some value, it’s not dollar-for-dollar.
As a buyer, would you pay more for a property with a brand-new roof if everything else was identical? Maybe. However, most buyers expect basic features like a functional roof and windows, so they typically won’t pay a premium for these essentials.
In our advanced modeling of Capital Expenses (CapEx), we calculate the cost of buying things that are partway through their useful life, but most buyers aren’t thinking about it like we would. They might not factor in the cost of replacing a roof that’s halfway through its lifespan.
Basic functions like a working roof, windows, and plumbing are expected. These are already baked into the property’s value based on comparable sales. For the most part, you won’t get extra value for upgrades like a new roof because buyers assume the property should have these basics. There are exceptions, like high-end or luxury finishes, but this is a good general rule.
When you’re evaluating a property, consider upgrades as part of the overall condition but don’t expect them to directly increase the property’s value by their full cost. They help the home sell—especially when compared to similar and similarly priced properties—but they don’t usually result in a significant premium.
Market Based Adjustments
When adjusting the value of a property based on desirable features, it’s essential to rely on real market data, not assumptions. As an investor, you need to make sure any adjustments reflect what buyers are actually willing to pay for upgrades.
Take swimming pools, for example. A pool might not add much value if buyers in the area aren’t willing to pay extra for it. In some markets, it could even lower a home’s value due to maintenance concerns.
To accurately determine the value of a feature like a pool, compare properties with and without it. This gives you real-time data on what buyers are willing to pay for that specific feature.
Using general rules of thumb to estimate the value of upgrades can be risky. Each market is different, and the only way to make accurate adjustments is by analyzing local data.
In real estate investing, assumptions can be expensive. Always base your adjustments on real data from your specific market. Features like pools or other upgrades might not add as much value as expected if there’s no buyer demand to support it.
Stable versus Changing Markets
When determining property value, it’s important to know whether you’re in a stable or changing market. This distinction impacts how you should use comparable sales and evaluate pricing trends.
- Stable Markets – In a stable market, prices stay relatively consistent, with no more than a 3% change in the last six months. Here, you can rely on comps that are up to six months old since price fluctuations are minimal.
- Changing Markets – In contrast, a changing market experiences more than a 3% shift in prices over the same period. In this case, you need to use comps no more than three months old to reflect the current conditions accurately.
Recognizing the type of market helps ensure you’re using relevant data to assess property value correctly when buying your first investment property.
Income Properties vs Owner Occupant
When determining the value of income properties versus owner-occupant properties, it’s important to compare like with like.
The type of property—whether it’s a single-family home or a multi-unit investment property—will influence how you assess its value.
For single-family homes including condos and townhomes, you should compare them to other single-family homes with similar characteristics. This includes factors like location, size, and condition just like we’ve been discussing so far.
When dealing with duplexes, triplexes, and fourplexes, try to compare them to other 2-4 unit properties. Ideally, you should match the number of units as closely as possible to ensure a more accurate comparison. Use what we’ve been discussing so far to determine comparable sales and value.
For multi-unit properties with more than four units, which are considered commercial properties, the valuation is different. These properties are often valued based on their income potential rather than traditional comps.
If you’re looking at something like a 17-unit property, and there haven’t been many similar sales recently, you might struggle to find direct comps. In this case, you could take one of two approaches:
- Price Per Unit Approach – This method involves dividing the sales price by the number of units of similar properties to get a price per unit figure. You can then compare this to other multi-unit properties to estimate value, even if the properties vary slightly in unit count. Of course, make sure the properties are similar, recent and close in proximity.
- Cap Rate (Income Approach) – This approach calculates the property’s value based on the income it generates. Investors often prefer this method because it reflects the property’s ability to produce cash flow. To use this, you divide the net operating income (NOI) by the capitalization rate (cap rate) to estimate the property’s value. You’d use the cap rate of what similar properties in your market are selling for recently. This method focuses on the income potential, which is key when evaluating investment properties.
Ultimately, for larger income-producing properties, the income approach (cap rate) is the most widely used and provides a clearer picture of the property’s investment potential.
Determining Value and Comparable Sales
When determining property value, ideally you’re able to access MLS data either directly or through your real estate agent.
But, free websites can be a helpful starting point for gathering comparable sales data too.
Here’s a list of useful websites along with a brief description of what each offers:
- Local County Website – Many local county websites provide public access to property records, including sales history and property tax assessments.
- Zillow.com – Zillow offers a popular “Zestimate” feature that provides an automated valuation of properties based on recent sales and listing data. Be cautious, though, as Zestimates—and all other automated valuations—can sometimes be off by a significant margin. More on this in a moment.
- Redfin.com – Redfin provides detailed listing data, including recent sales, market trends, and price history. It’s a great resource for tracking how long properties have been on the market and monitoring price changes.
- Trulia.com – Now owned by Zillow, Trulia offers similar features, including property listings and sales history, with an emphasis on neighborhood information like crime rates, schools, and local amenities.
- Realtor.com – It’s a good source for finding both active listings and sales history.
How Accurate Are Automated Valuations?
When determining property value, automated valuations from websites like Zillow can be tempting for quick estimates, but they are often inaccurate. This applies to all automated valuation models, but let’s focus on Zillow, as they provide some transparency about their accuracy.
Zillow’s own webpage explains their Zestimate and provides insight into how accurate these estimates are. Each market has its own accuracy rating, but it’s important to note that these models are far from perfect.
For active listings, Zillow’s Zestimate is off by more than 10% about 8% of the time. To put that in perspective, for a property listed at $400,000, Zillow might estimate it’s worth less than $360,000 or more than $440,000 in 8% of cases.
For off-market properties, Zillow’s estimates are even less reliable. More than 40% of the time, the Zestimate is off by over 10%. In about 20% of cases, it’s off by more than 20%! So for a $400,000 property, Zillow might estimate it’s worth less than $320,000 or more than $480,000, even though the real value is closer to $400,000.
These automated valuations tend to be most accurate when there are a lot of recent sales of similar properties. When sales data is sparse or properties in the area vary widely, the estimates become much less reliable. If you’re having trouble finding comps yourself, the automated models are likely having trouble too.
This challenge isn’t unique to Zillow. All automated valuation models struggle with the same issues. If you want an accurate valuation, it’s essential to do the work manually by finding and analyzing your own comps. Automated tools can give you a ballpark figure, but you shouldn’t rely on them for precise numbers.
Determining Value and Comparable Sales
How will you determine the property’s value or get the comparable sales you need to do it yourself?
- Real Estate Agent or Broker – Your real estate agent or broker is one of your most valuable team members. They have access to the MLS (Multiple Listing Service), which contains detailed data on recent sales. Agents are skilled at finding the most relevant comps and factoring in local market trends to provide accurate estimates. When the property’s value is crucial, you can ask your agent for their opinion of value or request a Broker’s Price Opinion (BPO). Alternatively, you can have them provide the comparables for you to evaluate on your own.
- Appraisers – A licensed appraiser provides an unbiased, professional valuation of a property. In addition to using comps, appraisers consider the property’s condition, unique features, and other key factors. Their reports are often required by lenders to verify the property’s value and can be useful for you as an investor.
- Paying for MLS or Sales Data Providers – If you don’t have direct access to the MLS through an agent, you can subscribe to services that provide sales data. Some online platforms offer detailed sales histories and allow you to search for comps. While these may not be as complete as MLS data, they’re still valuable for performing your own analysis.
By leveraging a combination of these resources, you’ll gain a clear understanding of a property’s market value, enabling you to make an informed investment decision.
Buyer’s Eyes
Normally, using “buyer’s eyes” is a strategy I recommend to clients looking to sell a property to fine-tune their asking price.
Here’s how it works: once you have an idea of what your property might sell for by going through the comparable sales process, you need to visit other properties that are for sale in a similar price range.
I’ll then ask them, “If you had $X (the price of the property we’re visiting), would you want your property or this property?”
- If they choose their own property, it likely means they are priced right or possibly a little too low.
- If they prefer the other property, it’s a sign they might be priced too high.
Now, since we’re talking about buying your first investment property, we can use a variation of this.
As you’re out looking at properties in the same price range, you’ll naturally compare them to others. The one you’re seriously considering should offer the best value compared to the other properties you’re seeing at similar prices.
It’s essentially the same as asking yourself, “Is this property I’m looking at now better than the best one I’ve seen so far in this price range?”
If you’re looking at properties with comparable prices, this approach helps you find the one that offers the best value without needing to rely entirely on comps.
If you’re buying the property for rental income, you’ll be using a combination of this “buyer’s eyes” approach and, more importantly, running the numbers to ensure it meets your desired return based on your investment criteria.
However, if you’re pursuing fix-and-flips, BRRRRs, or other strategies where precise valuations are critical, running full comparable sales is still the way to go.