Learning how to Establish an ARV using the MLS & Pellego

Avenida de la Vista. So we'll start getting a recording going here. Let me share my screen with you. Okay, we're logging into the MLS.

Okay.

Okay, so there's, there's a couple of ways to do this. One quick way is to type the address up here, see if it's ever been listed. If it has, you can see that it'll pop up. Try to grab the newest one. Okay, and so then what you're looking for is you're looking for the parcel number, which is on the right over here, and you're going to click on the parcel number. And then you go down to where it gives you an average estimated value right there. Now this is like, you know, really down and dirty, you know, really quick. You can see that the range is anywhere between $515 and $630 for this condo. And so if you're, you're wanting to kind of get something real quick, that this is what you're going to do is just literally just, just click away there and it's going to give you this estimate. This is This is what Zillow uses when they're doing their Zestimates and pretty much everybody else. So they go out in around the area and they pick up all the sold properties and then they give you a range. Okay. The proper way to do this is to literally— we're gonna highlight this address, copy it. We're gonna come back here. You're going to go to search detail residential. You're going to check on coming soon, active, active under contract, pending, and closed. Okay, check on all of those. Go to map search, click on there. It'll open up this window where it says here jump to address. You're going to paste the address of the property that you're copying. As you can see, it puts this little red bubble.

Okay.

That's the property address. So now you want to stay as close to this bubble as possible, and you can see that, you know, these are all condos, so these are all neighborhoods in there. And then I just start hovering over this stuff. So here's one at 3-bedroom, 3-bath, $719,000. Here's one, $725,000. Here's one, $729,000. And so if I start clicking into those, it's going to bring this up, which is what I want to look at. This one, um, is 1,908 square feet. We go back to the property details on this one, it's, uh, I believe 16. Where is it at? There it is, 1,588 square feet. Okay, so this is really not a model match, obviously way more square footage, so that's not something that I would use. Click on the next one here, 19 again. This one 18, a little bit closer but not exactly right on. Click up here, 17. This is like probably really close. You just click on this little check mark up there to pick it. You can see that it puts a check mark there. 680, same thing, check mark. And, and these comps are going back 6 months because that's what your criteria that you picked. Try not to go over major— this is not a major roadway, but this, you're getting into a different community over here.

Hey, Joe?

Yes?

Would this work if it's off-market?

The red ones that I'm looking at are all sold, so those, those have been sold in the last 6 months. Okay. Are they off market? Yes, but I don't think that's what your question really is.

Yeah. Okay.

Yeah, you would have to look up each individual property if it's off market and find out when it last sold. This, we're just doing after value, after repair value comps. Okay. Again, $648,000. Here's one that's That's pretty much a model match, 640. That one's too small. Yeah, those are too big. These, these 4 right there are too big. So, the orange one here, that's in escrow. Again, that's too small. So, that's pretty much what we've got around here. Well, this one's not too bad. 1,700 square feet. It's a little bit bigger. Wow, this one's crazy. That's 1,800 square feet. Wow. Okay, so then, um, these, these are going to be what, what we would call your after repair value.

Mm-hmm.

Okay, and then click on results. Okay, it didn't narrow it down like I wanted to, but we're gonna take this polygon thing here. See where I'm clicking draw polygon?

Mm-hmm.

And we're literally gonna check there and just draw it around the area like that. And now we'll check results. And then it'll, it'll give you the results of the properties that I checked. You can see that there.

Mm-hmm.

We're gonna refine that and we're gonna narrow that down to just the 4 checked ones. Okay, so now you've got an after-repair value in this property anywhere between $680,000 and $775,000. Yeah, there are a little bit Higher in square footage. So, you're gonna have to account for that. Maybe go down into the $700,000, okay, or $725,000 price range for this property. So, let's go to—

Hey, Joe, can I ask a question?

Yes.

If you have those price per square foot, what would you— if you averaged those across those 4 properties and then apply that to the number of square feet for the, you know, your subject property, would that be— is that a valid approach?

Yeah, you could try that. So, let's say the average there is what, $440?

Yeah, yes.

Yeah, give or take. Yeah. $440 times 1,558 equals $440,000. Times 685.

Yeah, okay.

You know, it'll get you close, but you kind of really have to look at these and the condition that they're in. You know, some of these— let's look at this 775 one. You can see, you know, that looks like Somebody went in and did a really nice job on this place and remodeled. Look, see the nice backyard and all that sort of stuff? All that's done. All that's brand new.

Right.

So we compare that to, compare that to this one, which is at $680,000, and even this one looks, you know, pretty nice as well. So, in this, in this market, you're better to err on the more expensive side because people are crazy anyways and they're picking these properties up left and right. So, you know, I would probably— this is a property that I'm flipping and I'm probably going to end up listing it for about $725,000, $730,000, around there.

Okay.

But I was going to go into Let me go into— I don't know why I can never get underneath there. Hold on.

So, Joe, can I ask, if you're gonna sell that property for $725,000, are you doing the renovation yourself?

Yeah. And that's where we're headed now. We're gonna talk. Okay. Okay. So, here's 17 Michelangelo and this is on Pelago. Okay. Pelago is saying it's worth $669,000. I know it's worth more than that, but that's their ARV. And so then you go over to the next comps here and you can see that they're doing the same thing that I just showed you.

Yeah.

Okay, so these are, these are the ones that they're picking. Obviously number 1 here, $635,000 sold May of last year, so they've adjusted the price to $669,000. And then you just literally just going through the comps. Here's $729,000 and they're probably adjusting the comps on this one because see the square footage is higher. So, they adjusted it from $729,000 down to $677,000. And then here's another one, another one. And so, you just go through the comps.

Okay.

So, then the next— go ahead.

Is Pelico comps pretty accurate?

Yeah, they're going to be, you know, pretty much just like Zillow or anybody else out there. What I was showing you is more of you're a real estate agent, you should be able to focus your efforts to establishing an ARV a lot closer than what they're using. But I like Pelico because It shows you the same thing that I'm just walking you through, and then you just, you just pick the ones that, you know, are matching, let's say.

Okay.

Okay.

Okay.

So then we go into the rehab, and then I'm gonna spend about $50,000 on my— I'm putting $50,000 in my budget over here. And then we go into the flip details. I purchased it all cash, so I do not need a purchase loan and I'm not doing a rehab loan. The after repair value, like I said, I think $725,000 is good. The carrying time is going to be way less than 3 months, but we'll put that. The purchase price was—

$525,000.

What did I pay? $540,000. And so without doing any further adjustments, you can see I'm going to make $89,000 on this flip. However, since I am a real estate agent, then we're going to go in here and listing agent commission. We're going to click on there and I am going to put Zero. Why would I charge myself commission? Okay. And then the selling agent commission, literally 2%, because it is a seller's market and agents are even happy to get 2%. So, Yeah. That brings my profit up, my potential profit up to $110,000 on this property. Okay. So, you can see from doing, you know, searches this way.

Yeah.

Okay, as a real estate agent, and then putting all the details in Peligo. Peligo is a really good site. I would encourage you to use it if you're getting deals from wholesalers. Just put the address in Peligo and go through the numbers like this. Now, if I had to finance this property, then I would put a purchase loan and then it would just, it would just bring down— see, my flip profit went from, it was $110,000 down to $91,000. So almost $20,000 in hard money costs.

Joe?

If you're— I'll get to you in a second. If you're, you know, if you're looking at a property like this and you don't have enough money to put down. Um, you know, would you still do this deal if you knew you were going to get $91,000? I think yes. Question? Somebody had a question?

Yeah. Um, Tina, yesterday I went into, um, Pelico and I entered an address, but it didn't pop out. Um, it didn't pop up the same property as what it was on Google. That ever happen?

What address?

Okay, it's, um, 811 West 97th Street in LA, Los Angeles. Zip code is 90044. See, that one comes out east, and that's not the same property.

Okay, let's go back. Sorry, let's go back to matrix then. Okay, so we're gonna go back. I'm sorry, where did you go?

Listen ID?

No, we're just gonna go back to the shorthand. So 811—

West.

And we don't put street designations. And you said 97?

Right.

Yeah, so that's all we put is there, and you've never— and I've never— and we never, never find it there. But we'll go back to Realist.

Okay.

Find it there.

Okay.

811 West 97th.

There you go.

Okay, so the reason we weren't coming up with it was because this is a multi-family and I was searching in single-family residence.

Okay, yeah, I should have told you that. Sorry.

Okay, so here's, here's the last time it sold. And the MLS information. So again, let's see if we can comp this because this is multifamily. So what we can do is come back here. Instead of residential detail, then we're going to go to residential income detail.

Got you.

And then we're going to do the same thing. We're going to go, uh, comp coming soon, active, Under contract, pending close. We're going to click on the map. We're going to type in the address, hit enter, and that's going to zoom us into that area. So then these are the options that are popping up. That almost, that almost looks like just a lot. It doesn't look— then it's Too small to be multifamily. So, here's one, 1.6. Let me see if I can get into these, these other ones. Yeah, these look like they're lots. They're so inexpensive that they're probably lots. Hello. Matrix has been doing this lately. It's freezing up. Of course, it always does this when I zoom in.

Mm-hmm.

Sorry for the delay. Come on. Okay, so we're back here. Residential detail coming soon. And then we go to the map, type the address in. And so, you know, we're looking at these residential incomes, a little bit harder to do the after-repair value because, as you can see, obviously there's not a lot of them around here. And the ones that I told you are— look, showed you those, those look like they're just Lots. They're not houses. If they are houses, they're just like teeny houses. So this one says 4 units. So we're waiting for court issue result update. Standard 50% ownership to be sold together with the remaining 50% probate. Yeah, that's— it sounds a lot like too many moving parts. So again, copying something like this is a little bit more difficult. If you look at this one, so this is 8 units. Do you remember how many units the other one was? Was it 4?

Um, 10.

Oh, it's 10. Wow. Well, see, then this one might be a little bit closer to what you're looking for. So if we jump back into the criteria and we put number of units, we'll put 8+. That'll narrow down the search for us. You can see we've got this one there, 8+.

Typically not.

Let's see here. We've got this one. It is 8 units again, $2,500,000. So, it's, it's, you know, doing multifamily is a lot more difficult than just single-family, as you can see. So, but this is, you know, exactly what I'm teaching you. This is what you would do. Just literally look around the area. Here's one at 1.1. What does that one look like? That one's 8 units. So this is what, this is what you would do. What is the wholesaler saying about this property? How much they want?

Okay, so it's fully renovated. It's more of like a buy-and-hold situation. And, um, They're saying that it has like cap of a 6% rate and, um, monthly they're bringing in like $19,200. They're asking a lot. They're asking for $3.4 million.

Yeah, but it sounds like it's, you know, why aren't they listing it? It sounds like it's already been rehabbed. Oh yeah, what's the purpose of sending it out Okay, the tenants, I guess Section 8. Yeah, yeah, like I said, if you're gonna comp something like that, this is, this is literally what you have to do. You know, do this and then look around the area of what things are selling for. And obviously that one looks like it's Way too much.

It is.

You look at— here's $1.9 million, here's $1.2 million. Let's look at this $2 million one. This is 16 units.

Oh wow.

Yeah, so definitely, definitely look around. Is there another one that you want me to look up for you?

Okay, yeah, I have one in Laguna Niguel. And then last one, I know everybody's busy. Okay, so, um, let me know you're ready.

Go ahead.

It's 23731 Turtle Cove, Laguna Niguel, and that'll be 92677.

I think I've seen this one. Does it have some foundation issues or something?

Um, not sure. Is that the one?

Yeah, see down here, this home has settling issues at the back of the house. Okay, not pass appraisal, so cash or high down payment. Um, but you know, let's, let's just, let's just do the comps just to— so I can show you. So this is what we're looking at. This is what they have it for sale at, $699,000. Let's go to, let's go to Pelago real quick and start there this time and see what they say. So for some reason they're saying 964. I have no idea why. Number 1 cop, 920, literally right Almost next door. So that's, that's good. This one, this one's too far away. Definitely too far away for my taste. So I'm going to put thumbs down. Number 3, same thing, too far away. Number 4, same thing. These are all too far away. Number 5 is okay. Number 6, yeah, definitely not. And number 7?

No. Number 8? No. Number 9? No. Number 10? No.

Number 11?

No.

Number 12?

No. Number 1?

Number 2? Number 3? What's the one right behind it? 4, 5, 6, 7, 8, 9. Well, that's number 1. I think number 1 is probably the closest model match, but anyway, they say $900. Let's, let's go back and do the search again the way you should do it as an agent. So again, we're gonna pick these top 5 here. We're gonna go to map search. The address in there and it's going to get us into the neighborhood. And remember, I want to try to stay in this neighborhood here. And I— you can see there's not much happening.

Okay.

And that's why, that's why they're going out of the neighborhood. If that happens, go back to criteria and change the close date. 360, that's a year back. So let's see if we find anything a year back. Okay, so now we've got one that popped in here, $825,000. It's 1,838 square feet. This was— oh, that's not it. Do you remember how many square feet it was?

Yeah, it's 1,834.

Okay, so that's like really close. So that's the comp that I would, I would use. You know, this apparently sold a year ago, which is fine. So You know, a year's a long time, especially in this market. Could it, could it have gone up to $900,000? Oh yeah, that's, that's a strong possibility. It could have gone up to that. The issue with this property is the foundation.

Okay.

It's like you have to deal with that issue to fix it, and then you have to disclose that at the end of the day, and that's how come I don't do any foundation issues.

Gotcha.

I don't like them. What's this one?

This one's—

well, so that's, that's why that one's just literally sitting there at this point, not sold because of the foundation issue. If you wanted to tackle that, then I would say either find out from the agent if they've done a geological report. And if they have that, they can share with you to find out how much it's going to cost. If not, if it's a lazy agent, they're going to tell you you need to go do it. I don't believe that that's the way it should be done. They, you know, they're trying to sell the property, so they should give you all the information. But sometimes agents get lazy and they don't want to do that, and then it just sits there because nobody else wants to pay for doing that as well. So, you know, if you wanted to go look at that, then that's what you would need to do. Let me go back here and see if I can find the listing again.

Yeah.

So, if they want $700,000 and you think you, at the end of the day, you think you can get $900,000 for it, you've got $200,000 to play with. The foundation, it should The foundation issue, depending on how bad it is, it may cost you $50,000, $60,000 or more. And then you have to, you know, take that into account in the rehab as well.

Okay.

Okay. But as you get these deals from these wholesalers, I would start out with looking at the PellaGo website, putting the address in there.

Okay.

And seeing if the numbers work out. And then if you really, really want to be more thorough, then come back and do what I just did here. Just take the top 5, click on there, click on map search, jump to the address. Again, focus in that immediate area for the property. We didn't have anything because we Change this back to 365, go to map again, and then that other one pops in there.

Okay.

Okay. So you literally want to stay as close to this neighborhood as possible. You start going out, you can see that, you know, these are way more expensive. If, if you know the neighborhood and you know that, okay, all these houses in this neighborhood were built by the builder, They're all the same floor plan, you know, well, there's going to be 3 or 4 different ones, but they're all the same, then that's fine. And you can start, you know, checking on these, clicking on these, going, okay, well, this one's over here and that sold for $975,000. Let's just take a look at that one. Oh, here we go. I'm frozen again. I don't know why it's doing that. But, you know, try to stay as close to that area as you want. You can see Alicia running down the middle. You do not want to go on this side to grab comps because that's a major roadway right there. There we go. So yeah, I don't know if this one's even close to what you were looking for on the other side. Looks like a huge lot, has some nice views. Everything's nice inside. You know, but that's $975,000 as well. I don't remember what the other one was. Okay, but do you have the gist of comping correctly? Doing the after repair value? It's not that hard. Again, you can click on the parcel number and go with, you know, real quick. Like if I'm gonna look real quick and I've got somebody on the phone says, well, how much do you think my house is worth? I'm coming right here. I'm going, you know, the homes in your area are selling anywhere between $939,000 and $998,000 depending on the condition of your home. You know, is it something that needs to be fixed up or is it totally rehabbed? That's why I need to come out to look at your house. When would you like me to come out? Friday, 2 o'clock work for you? Okay, I'll be out there Friday. And then the next thing that I'm going to do is I'm going to go back and I'm going to do comps on the property.

Okay.

Okay. And if we go back here, So let me show you one last thing while I have you. If we start picking a bunch of properties here, let's say we want to send them out a comparable market analysis. You're going to need at least 3 properties, sold properties, and you want some properties there like in escrow— I'm sorry, for sale and in escrow both. But you can see that there's nothing in this area. Oh, here's one. There's nothing for sale. This is not going to be really a comp, but I'm just going to show you something else. Yeah, that's the only one that's for sale. Look at that, the only one for sale in that whole kind of area there. If you come back or you go down to the bottom here where it says CMA, you click on CMA. Yeah. And I'm just gonna pick somebody here, and then you go to pages, and all this stuff you should have already set up. Subject, comparables, maps. I mean, this is putting way more information than I would put. I'm just showing you. And the subject property, so we would, we would pick out, see here, Put out the listing number, you go back, you put the listing number here, and then it fills the information in for you so it can do the comparables. And it already has a cover, has your information, then it goes into comparables that you picked. So you picked all of these, and then you can see them on the map where they are. And this number 1 is not a comparable, I'm just showing you this. You can make adjustments here. So you see that these are really inexpensive. So to get them up, they— you would have to say, okay, well, the reason that this one is worth less than this one up here, you know, let's pick style. So it's got $25,000 more in upgrades, so you put 25 there, and then that increases the price of this property. Same thing here, we're going to put minus $25,000 to decrease the size of that property. So you can see you're trying to get these numbers to be equal. Pricing, you would tell— you would tell you what the low is in the area and the high in the area. And the average obviously is right here. And then you could suggest a list price here. Finish at the end of the day. And view CMA. And then this is something that you can either take to your listing appointment with you, or you can— what I usually like to do is I generate the CMA right before the listing appointment, like the day before. I will send this to the client. So that they have time to look at it and review it before I show up on their doorstep to tell them, hey, this is what I think you should sell the property for. Okay, and that's what it looks like. And then it goes into the comparables, what we picked, how you picked them. And then it goes to the side-by-side comparison. So this, this is what a CMA should look like. Okay, and it goes into price between this and this, 3 bedrooms, 4 bedrooms. So kind of the details here is per square footage. And, and the reason is the square footage is so different because we picked this one for $659,000, which I told you wasn't a comparable. But I'm just showing you this. So it talks about days on market, which is really important, and the graph. And again, it go— it— this has way more information than I would normally put. I'd like to put— there is information in here that I've put. I'm going to get down to it in a second here.

Whoop.

Okay, so this explains a market analysis, what it is. And this is the importance of pricing. This is where I really go over, okay? Because if, you know, they decided to, you know, put it at a price that is too high, so it's 15% above where it should be, what I told them, here's the market value, where do you want to list it? Oh no, Joe, Our house is the best house in the neighborhood. I've looked at everybody else's. I want to list it up here. I go, okay, that's fine. We can do that, but I want to show you this graph. If you put it at market value, 60% of the buyers are going to look at it. If you put, put it for 10%, that increases it to 75%. But then if we go the other way, if you go 10% above, you're only reaching 30% of the buyers because you've just outpriced them. Okay, and then if you go 15%, you've only got 10% of the buyers out there. So where do you want to list it? You know, you want to try to get them right here at the market value, which is what you told them. Okay, and here's activity levels. So the first 2 to 3 weeks is when they're going to get the most activity. After that, it just falls to nothing. Unless you start lowering the price. Once you start lowering the price, this graph kind of repeats itself again because there's more people looking at it. So, effect of overpricing, you can see less than 4 weeks if you, you know, only go 1.9% above. You go close to 10%, it's going to take you 24 weeks or more to sell this house. And And then I know you're sitting in a presentation, you're explaining all this stuff, and at the end of the day, they're going to look at you and go, yeah, we want to list it up here. Okay, list it up there. You've had that conversation. When it's not selling, you, you know, call them back and say, hey, it's been 2 weeks, you've got— you've had 2 showings. Okay, remember we talked about this. You— I think you've overpriced the house. Let's reduce it. Let's start getting the showings in there because that's how you're going to sell your house is the showings. If you don't get those showings, you're never going to sell the house. Any questions?

Um, Joe? Yes. I know you said you're going to record this. Um, are you putting it up on YouTube or—

I'll just send it out to, um, all the agents.

Yeah, please.

I will.

Thank you.

Anything else that you need from here? You know, trying to establish the after repair value. Remember, if it's residential, you need to be in residential. If it's multifamily, you need to be in income. If it's, if it's land, you can, you can do that. Manufactured on park, in park, that's just literally a mobile home. In a park. Commercial, we don't— I don't deal with a lot of commercial, but you can do comps in here if you need to.

Okay.

Okay, anybody else have any questions?

No.

No? Okay, well, thank you for showing up. I appreciate it. As soon as this is recorded, I'll send it out to everybody.

Thank you.

All right, Joe. Thanks a lot. Yeah, very helpful.

All right, you guys too.

Thank you.