In this Wednesday Wisdom call, Justin Colby explains how you can quickly do a desktop analysis, even if you don’t have MLS access. When a property seller asks you for an offer, you can literally say, “I’ll have an answer for you in five minutes,” then do these steps and reply to the seller. The sites Justin’s office uses most to make these assessments are Redfin and Zillow. Listen to this session to hear examples of desktop analysis using an actual property Justin is wholesaling right now.
Justin looks up one of his actual properties and walks you through step by step, explaining how he effectively uses Redfin to do a quick desktop analysis. He begins with square footage and how to use the map to stay within the best corridor to find subject comp properties. If you need a better understanding of how to use price per square foot to determine a good “ballpark” estimate, Justin discusses it here. Redfin shows other comparables based on his finds. Justin describes how he decides which ones to ignore. Use an online comp calculator to help you find the average, plug the numbers into the formula and work it backward. You can hear all of this and more great applicable tips, on this coaching call.
Listen to this coaching call to hear how Justin explains the strengths of Zillow in doing a quick desktop analysis. Zillow provides a great way to cross-check your own work. Did you know that you can also use it to find out whether a property’s addition was legally permitted? This is important because if an addition was not properly permitted, it decreases the value of the property. If you’re wondering about “potential listings” versus “recently solds” you can hear which one Justin finds more valuable. Make sure to keep your search based on the last six months. Find more comparables. Remember to consider ARV (after repair value) as well as “as is” comps. Justin explains more about the best way to determine your percentage of offering. Boom! You have an answer for your seller. Tune in to hear all the details of how Justin arrives at the final offer.
Outline of this great episode
- [3:00] Justin begins to talk about a real deal using Redfin
- [5:00] Price per square foot information and finding comparables
- [10:00] Using a comp calculator
- [13:15] Example of desktop analysis using Zillow; different strengths of Zillow
- [18:00] “As is” comps
- [19:00] Explanation of final formula
- [21:00] Q & A session
Resources & Links mentioned in this episode
The Monday Mindset & Wednesday Wisdom calls are group coaching calls included in the REWW Academy. These live calls are hosted bi-weekly by Justin Colby and Pat Precourt and cover a specific topic each session – ending with live Q&A at the end of each call.
These calls are designed to empower students to be effective entrepreneurs, creating business that thrive and make money through real estate investing. Students are encouraged to attend the calls and bring any struggles or questions they have about business or real estate.
The REWW Academy program combines our complete suite of software applications with our personalized coaching and a community of like-minded entrepreneurs to provide you with the most comprehensive real estate investing program available.
Below is the full transcription of How to Do a Desktop Analysis Presenter Monday Mindset call with Justin Colby.
Alright, guys. So, welcome to the call. We are going to jump in here and we are going to be talking about how to do a desktop analysis. Obviously, I am Justin [Colby 00:00:11], and I want to make sure that you guys are all in here and being able to analyze these properties quickly so that you don’t have to spend a ton of time to come up with a number that you believe would fit. So, why don’t we jump in. Here’s how this is going to go: I’m going to get off camera. I’m going to jump in. This is all about a desktop analysis, right? So, this is for those of you who do not have MLS access, right? Excuse me.
What I want to be able to do is give you a very in depth look at how you’re going to be able to use Redfin and Zillow, which is our two that we typically will look at, so that we can come up with a good understanding of how to make an offer, right? Because you have people that sometimes are going to be on the phone and the just want an offer now, and you can say, “Hey, let me call you back within next five minutes and I want to give you an offer, or at least brackets, where we are in the offer place in the offer price, and I can call you back in five minutes.” And the reason why is because you’re going to do exactly what we show you today.
This is what we consider a desktop analysis and it’s not difficult. We stick to pretty much two, for the most part. There are other websites out there. [Propillio 00:01:33], which is big in Phoenix and in Texas, are out there. MapQuest is out there. But I’m going to show you exactly how our office runs this every single day. So, I’m going to jump off camera, I’m going to jump into my screen, and we’re going to start looking at a real property that we actually are wholesaling right now. We’re set to close, I think, Friday this week, so this is going to be a real, live example of what we’re looking at so that we can figure out what to offer at. So, hang tight. Let’s go show screen. Take camera off.
Alright, lets make sure that you can see my screen. Make sure you see Zillow on here, Redfin. Here’s the property that we’re going to be looking at. This is the … Interesting. Make sure you can see Redfin here. Let me know you can see Redfin and then we will keep moving forward here. Alright, right on, Maureen. Welcome.
Alright. So, this is a property that we actually have. This I a deal that we’re currently doing right now. It is … Oh no. I don’t want to go to YouTube. I want to say this is it. Yep, this is it. So, 3525 West [Tuckey 00:02:57] Lane is a real deal that we’re doing. What’s up, Noreen. So, I’m going to be looking for both Redfin and Zillow, and there’s certain things on Redfin that I use, and then there’s certain things on Zillow that I use. Stay with me, because we’re going to be looking at one then jumping over looking at another.
Now, one thing I really like about Redfin, and you can see at the top here, they have their Redfin estimate. That’s fine. I don’t put a lot of value, necessarily, in what they estimate. They have the bed, bath, this … You know, they don’t have recorded the bed, they have the square footage, and the year built. That’s a great place to start. If you scroll down, what I’m really interested in here in Redfin is this map, okay? So, if you’re able to take a look at the map and zoom in a little bit … As you can see, I don’t want to cross a street like 35th Ave, right? That’s a main street. So is 43rd. You can scroll up a little bit. Glendale Ave. Scroll down. And Bethany Home. So, ideally, I want all of my subject comp properties to be in this corridor, and here’s plenty in this corridor.
Now, what I like about Redfin is it starts to show you pictures. So, if you click on one of these, let’s click on D. D is obviously a after repair value, as you can see and you go through some pictures. They’ve put work into this. This is a rehab. Nicely done rehab. So, now I’m starting to get a gist of price per square foot, right? You can see here it says 131 dollars a square foot for a 1,600 square foot home, right? The nice part about … Let’s go back to D. Hold on. Zoom in. Let’s go back to D. So, this is a 3 2, 1,600 square feet, which is close enough. C is a 3 2 1,700 square feet. A is a little bit bigger, it’s at 2,200 square feet.
Our subject property is at 1,900 square feet, right? So, I really like A, I really like … Let’s see what B looks like. B’s a little small, right? I don’t love B. I really like A. D’s okay. Okay? What does F look like? E really looks, as far as price per square foot, right? So, you have 1,900 square feet. You want to be within roughly 10% square foot either way, right? Our subject property is 1,900 square feet, so I want to be 1,700 to maybe 2,200 in where I want to be. So, this property, E, would be a great subject property, so I want to go in here, I want to take a look at what it sold for. This has a pool, so there’s a value for that. This is an absolute great rehab. This sold for $111 a square foot. Right in the same ballpark where we’re at for square feet, right? So, now you’re starting to realize what you can get per square foot for a home. This is a great rehab.
Now, which is great about Redfin, is if you stay in this, which is a comp, right? So I would be writing this down as a comp to … And one thing I want to try to bring up is my comp calculator. Hang tight. Let’s go in the finder. Comp … calculator. No. So, let’s just go into comp. Let’s see if I can find it really quickly. Comparable. Comp evaluator. I think this is it. Okay, so what I want to be able to do is write down these comparables, right? So, this is a great comparable. Now, one thing I really love about Redfin is their ability now … If I go back in here to the map, it’ll actually … Based around this, I have now what they consider other comps based around this one comp, right? So, I have other comparables. Alright, well, I’m going to close this until it comes up.
So, now I can actually, again, focusing in between the 35th and 43rd I might be able to find other comps that didn’t come up initially, right? So, B’s not a great comp because it’s a little too small. A’s not a great comp, it’s a little too small. C is a better comp, you’re right in the ballpark of square footage. Let’s see what D is. D is a little too small. F is very nice, right? F could work. 100% could work based around the square footage.
So, now I jump in here, and let’s take a look at some pictures. Very nice rehab, again. You can see by the flooring that this has been rehabbed, right? Open wall, open living area, right? So, this is also a rehab. This is $107 a square foot. If you go back to the last one it was $111 a square foot, right? You’re right in a ballpark that you can start to realize … You know, you could probably start to estimate $110 per square foot for these homes that are being sold, is a good number that you can average out at, right?
Holy moly, where did it go? Comp calculator. Today? Comp evaluator. Okay. This isn’t the exact one I wanted, but I don’t want to spend too much time trying to find the comp calculator, because … Well, let me see if we … Not comp evaluator. Loan, apples, blank. Okay, let’s just take one more second. TSOF, signs of flipping, of course. Investment calculator. Comp calculator. I knew it was called something. There you go. Jeez.
Okay, so this is the comp calculator you would want to be using. You obviously … What I’m going through right now is I’m basically going over ARVs, right? I’m looking at these, these are obviously rehabs. This sold at 219, so I would go in here and put 219 in here, and then this obviously is going to adjust based around the numbers I put in here. So, if I go back through, that was 37th, this is my subject property. I go back in here. I like C as far as square footage. Let’s go into C, see what C’s got for me. Looks clean, they put some work into it. This is sold at 127 a square foot, right? It’s not a full blown rehab, there’s a little work that was put in there. This is sold at 225, so I’d go in here and say 225, and then I want to make sure it’s the average of E 14 to 16. E 14 to 16, it should calculate that, right?
Then, lastly, is find another comp in here. Let’s go … Again, Redfin, once you go into one comp it’ll bring up another nice little map for you. See, again, I’m trying to stay within Glendale 43rd and 35th. What is A? A is close. Look at B. B’s not really close. Look at E. Not too close on square footage. How about C? D looks pretty good. Let’s look at D. This looks like a nice little rehab. This one sold pretty high at 131 a square foot. They definitely put some money into it. They have a pool, which you could adjust for. I don’t love this one, so let’s go back to my subject property, [Turney 00:12:16], and let’s see what else we can look at here. Oh my gosh.
This is the one I wanted. This sold at 203. Okay, so I go in here and go 203. 203. Okay, so I want to make sure that this is the average of the two of the three. So my average is at 215, right? Between these three comps. Now, all of these comps are going to be able to be in a very good, close square footage, right? So, you know that the ARV average is roughly 215. You could probably sell this ARV 215. You can work your formulas backwards, right? That way your formulas are all in here.
Now, if you’re looking at Zillow … Let’s go back to six … 3525 West Turney … Tuckey. Alright, boom. Now, how I’m going to use this is I want to start looking a little bit more at some other features and facts, right? I want to make sure that a lot of this stuff lines up, right? The built date, I want to make sure the square footage lines up with Redfin. A lot of this is crosschecking your own work. And then, also, I want to make sure the county website on Zillow actually gives us, and truly gives us, the right square footage. So, there’s all the information here. Owner’s name is here, the past evaluation information is here, you have your pool, no, and then you have the square footage that you’re cross checking, right?
Another great part about Zillow is you want to make sure if there’s any additions that they were permitted. If this home says 2,200 square feet and you come into this sketch of the property and you can see here there’s this big … You know, there’s no addition here, but on the records on Zillow or Redfin it says it’s 2,200, well, obviously it’s not permitted, right? So, now I’m not able to get a permitted addition, which decreases the value, okay? So, you want to be looking at these sketches, because you want to make sure you’re getting the right value out of it.
With that, I’ll go back here. You have basically … One other thing that I look for is to see any … See, here you don’t have any price history. This means the home’s been in the family for a while. It’s been owned for quite some time, so it hasn’t been sold recently. That’s a good thing. That’s a good thing to know. Then I also want to make sure that they just have a similar square foot, right?
Now, if you close this, I want to start looking at the other properties. Now, I’ve closed the property on Tuckey, right? And I can look it up again simply by clicking in this search bar, but one thing I want to simply do is I want to actually go in here, listing types. I want all for sales. I don’t care about potential listings. I do care about recently solds. Now I can go in and actually look at recently solds. So, again, here’s 35th street, here’s [Accatio 00:15:49]. I want to stay in this block, right? The big main street … There’s Glendale. Come on. Okay. Sheesh. Okay. Oh, no. Now I’m really goofing it up.
There you go. 35th street, okay. Then, I want to make sure that we’re finding properties that are only sold in the last six months, right? Usually they’re going to default to any. You want to make sure that you’re saying in the last six months. And apply. Now you can see the yellows are going to be the sold. Or, yeah, the yellows are going to be solds, reds are going to be for sale, okay? Now you can start going in and looking comps again, right? This is not a bad comp right here. Sold for 165. I would argue that if you’re going to click on that, I’m willing to bet this is as is, there’s no pictures here. We’ve been noticing recently, Zillow has not been great at the picture side of this.
Let’s see this. Alright, here’s the subject property that we already saw. This sold at 180, right? What square footage? 1,646? You’re close. You’re close to square foot. I really want to try to stay within 10%, which would give me about 200 square foot margin one way or another, but you’re not far off here, right? You’re not far off here, but you could use this as a comp. So, really, I’m kind of using Zillow as a crosscheck to see what else is out there. Here’s another comp, right? 2,200. This is one we’re using already, so that checks out. You’re right here, right? You’re right where we already have it for the ARV, so you know what ARV’s going to use.
You can also go in here and look for as is comps, and you would plug them in here, because then you’re going to know exactly kind of what the value is if you purchased it as is. But based around our formula, it’s really important to be able to know what the high comps are so you can figure out per square footage what you’re going to be offering, right? So, this is always going to be where you can do percentage of offering, right? You can put in the repairs, and then this is based around, obviously, I haven’t fulfilled all the numbers, because this is all base around the low end comps, but you can also put these as a high end comps, right? Make sense? So, it’s another great comp calculator for you guys to use.
But the reality is, Zillow and Tuckey, you’re now done. You know exactly where you need to be. We’re offering roughly 80% of value, right? And then we subtract our rehab comps, just like here. So, 80% is typically where we’re at. 80% of the ARV, which is 215, right? So, if you’re looking at the formula, average of E14 through E16, if there’s $13,000 of repair, we need to have an offer in at 80 grand, right? Because this is 80% of this number. Okay? 93 … Well … That can’t be right. Let me just go in and … There you go. 172 would be the offer at 80%, right? So, now you’re able to see, okay, if your repairs were … If your repairs were 25 grand … Q11. Where’s … Right. So, if this is 25 grand, it’s going to change the formula. See? So, you can make it very simple. If you want to make an offer at 70% then you’re going to make an offer at 70%, right? This is what 70% would look like. So, now you can see very quickly how to make the appropriate offer.
I know in my market, 80% is really the number that we need to be going in at, so 80% of 215’s 172. If you subtract your rehab cost, you can make an offer, you know, 147. You want to make some money in there, but that’s going to be your sale price, right? Now you know what you’re going to sell it at, now you can actually just go in and subtract how much you want to make. If you want to make 10 grand, then lower it by 10 grand. If you want to make 20 grand, lower it by 20 grand. Very, very self explanatory. Again, I went thoroughly in this for you guys so you guys can see how to get this done, but at the end of the day, this should take you five to ten minutes most. You can call back the seller and go ahead and make the offer.
Alright. Let’s rock, lets get back into … Let’s stop sharing that. Let’s get back into here and let’s do some Q&A. What do we got? Noreen, what’s up? These are sold in the last six months, Noreen.
What is the process with non-permitted additions? Well, that’s a great question, Noreen. You can actually go in and then get it permitted, right? Or, if you’re selling it to a rehabber, they know what they’re going to do, but basically, you’re going to be able to sell it for the square footage and let the rehabber understand that this is not permitted. So, to count this technically as sellable square feet, you’re going to have to go in and get it up to code and make sure that it’s permitted. That’s what you’re going to have to do.
Alright. That is it, guys. That is how you do a desktop analysis with Zillow and Redfin. Again, and in Zillow you can actually get over to the county’s website. Very, very helpful to verify that all the information is correct. Appreciate you guys. Oh, we got more questions?
Minus what you make is the wholesale fee, and rehabbers profit is in the 80%. Yeah, so, Dave, here’s … I’ll do some quick math for you guys, right? The cost to sell a property, when you list it, is roughly 10%, okay? 10% typically is the cost to sell a property. Typically, 6% real estate commission. Typically a percent or two for closing costs. You have any type of repairs and cost of money in there, right? So, you have cost of money for loans and things of that nature, so it always comes out to roughly 10% to sell. And rehabbers in our market want to make 10% profit. So, if they’re going to sell at $250,000, they want to be making 25 grand on that. So, that is where we have found is the sweet spot to be able to say, a rehabber what’s to make 10% money, right? So, if they’re selling ti at 250 they want to make 25 grand. Typically to sell a home it takes 10%, so all the sudden we’re right at 80%. Make sense? See how I followed that math? 80% seems to be the sweet spot. At times do we pay more? Yes. At times do we offer less? Yes. But that 80% really is quite a sweet spot.
Mark, I’ll make sure you guys have that calculator. Not a big deal.
What about what you offer the seller with non-permitted addition? You just got to … When it’s non-permitted, if it’s livable square foot, you’re going to offer the same type of formula, right? You might take a little deduction off to say, “Listen, this is not permitted. I can’t really count this as true livable square feet. I know it is, but I need another $5,000 reduction, because I’m going to have to go to the city, and I’m going to have to go through making this … You know, I gotta make this permittable.” This is where your negotiations come in, Noreen. This is where your sales tactic, your persuasion, your negotiating ability really comes in, because that is a negotiating … You know, that’s a place where you can lean on to say, “I need a deeper discount. I’m going to have to go in and do what you didn’t do, and for that I need a discount.”
I’ll make sure everyone gets a copy of the calculator. Easy.
Yep. Right on, right on. Alright, guys. That is your desktop analysis. Appreciate you being on the call. I’m out. Peace. Have a great week.