A common job of real estate agents is to help people make a profit in by flipping houses. One of the key tools you need if you want to cater to would-be real estate investors is the ability to come up with an accurate after-repair value for a house so the prospective buyers can decide whether it is worth their investment. Although you could offload this part of your job to a specialist, if you do it yourself, you know it’s been done correctly, and you increase the size of your commission from the sale.
How Can You Estimate a House’s After-Repair Value?
If you are not sure how to estimate a house’s after-repair value, other real estate agents can help you with their tips and tricks. You can also benefit from online research.
It’s difficult to give your clients a true estimate of the property without first walking through it. While it could look good on paper, the house may end up being more work than your clients are able or willing to put into it. When your clients begin narrowing down properties, walk through each with a checklist, being sure to take notes on the condition and each problem you encounter.
Once you have studied each house in question, you need to search for the sales of similar real estate properties. The house’s after-repair value should be similar to their sale prices. Ideally, you want to find real estate properties in the same neighborhood that have the same specifications and have sold recently. Since this is not always possible, you may have to settle for looking into real estate properties that are the same size, have the same number of bedrooms and bathrooms, and are in similar neighborhoods. While you can use online databases like Zillow, your colleagues can also be a good source of information for areas you are not familiar with.
If the cost needed to repair the house would make it unprofitable at the range of possible values you get from your research, you should advise your clients to search somewhere else for a better return on their investment. You should give the same advice if the house is in an area where real estate properties take a long time to sell as the time needed to sell can be just as important as the expected value of the sale.
Commission Express wants to help you be the best real estate agent possible. If you are waiting for a sale to go through and find yourself in need of a cash flow solution, give us a call. One of our local franchises will be happy to help you.