Evaluating sold comps systematically. Contrary to popular and often misguided belief, you can use a formulaic system to work in your favor when determining what to offer on the short sale property. This system has been around for years, but for some reason you may have not heard of it mentioned dealing with real estate. Here is the system. You will use the law of averaging. The way this works is like this.Let's say you have eight sold comparables that are all similar in size, square feet, bedrooms etc. Here is how you apply the formula. You would take out the two highest comps and the two lowest ones and average the rest.
EXAMPLE:
You have a property you think is worth $145,000.
You have a realtor pull a CMA and you find eight sold comparable properties that match the criteria above.
The MLS shows the following:
$159,000
$154,000
$153,000
$161,000
$148,000
$143,000
$146,000
$151,500
Using our formulaic approach you would take out the two highest sold comparables ($159,000 and $161,000). Then take out the two lowest sold comparables ($143,000 and $146,000). This would leave four other sold comparables.
$154,000
$153,000
$148,000
$151,500
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You would then take an average by simply adding up the sum of all the sold comparables and dividing them by the total number of properties left. In this case, that number would be four.
Total: $606,500 divided by 4 = $151,625
You can reasonably justify the house may sell for $151,625 instead of the $145,00 you originally estimated.
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