How to Set Purchase Price in Less than 1 Minute

My name is Mundo and I'm a two time CFO of the year and one of Pacemorby's business partners. And today we're going to talk about how to set the purchase price of a property in less than one minute. So let's go ahead and dive right in and start the clock. All right, let's do this. First thing we're going to do is we're going to type in the property address. So I am pulling up one of the properties that I bought recently via sub 2 and we're going to take a look at it. So what I do is I look at Zillow, I look@realtor.com, redfin, any of these reputable listing sites. I'm going to go ahead and pull this up. So we can see here that this property is showing that it's worth 321,700 and you can see the range between 306 and 338. And then I'm going to go ahead and take a look@realtor.com and we can see 332. So we have a couple comps that we're looking at and this one is a little bit lower at 307. I like to use Zillow. So we're going to take this number and all we're going to do is simply add 5 or $10,000 to it. That's it, that's the end of the underwriting. You can get into some really sophisticated comping and start drawing points on a map and really looking at comps and like for like properties. That is great and I definitely recommend you do that. However, when you're talking about a bank value purchase price, what I mean by that is a purchase price that an appraiser can actually get on board with and give a estimated value on. Typically in my experience what I found is simply taking Zillow number, adding five or $10,000 max. If the property is in great condition, you can probably get away with $10,000 higher. If you, if it's not in good condition, I would probably stick with five or at the top end of the zestimate within itself. 9 times out of 10 the appraised value is always going to match the purchase price. That is something that I found in my experience in doing this is that it usually comes back exactly what the purchase price is every time, unless you're getting crazy with it. So why is that important? So, so why is that an important number to know whether you can list it at the estimated value or push it up 5 or $10,000. Let's go ahead and take a look at that. So if we have a property that is listed at 300,000, $330,000, and we want to take this up a little bit, whether you're being a seller or you're being a buyer, right? So if you're a seller, obviously you want more in your purchase price. And if we push that number up to $10,000 and we think that we're going to be able to get this appraised at 340, then you're good to go. You got an extra $10,000 in the deal, Right? However, if you set this price at ten thousand dollars and the bank comes back and appraises it at 330, guess what? This ten thousand dollar difference is gonna have to come out of the buyer's wallet. And guess what's going to happen? They're going to come back and renegotiate with you. They're not going to have an additional $10,000 come out of their pocket. So it's really important to know what that number is, whether that be in the 330 or the 340. And if you're a buyer, sometimes that's important to know, especially if you're structuring a creative finance type of deal and you can add another five or ten thousand dollars to the purchase price, that gives you additional leverage that you can take out on the property and hopefully put you in a better spot for your stabilization plan of the property itself. So hopefully you understand why it's important to know how to comp and you really don't have to get into super sophisticated comping. You saw right there. We just did this in literally less than a minute. See you next time.