If you have evaluated many deals and were mining the MLS for your future listing price... also known as your after repair value (ARV), you know how critical it is to understand how long properties have been sitting on the market prior to going under contract.
There are two critical numbers involved here. They are Days On Market Property (DOMP) which indicates to TOTAL number of days a property has been on the market since it was first listed. The other critical number is the Days On Market (DOM) which indicates the number of days on the market since a change in the listing has been made. If you want to see how long a property has "seasoned" just look at the DOMP and it will tell how long this property has been listed... and it is no longer a simple task to reset that number... because in Maryland the property has to be taken off the MLS for at least 90 days to reset the DOMP.
OK... so why is this important?
Let me share a quick story with you.
I had lunch last week with a relatively new investor who had locked up a deal in Capital Heights. On the face of it this looked like a slam dunk. There was a comp on the street of $195K which the realtor proudly proclaimed had sold in 27 days. I was impressed and even more excited about this deal. The new investor got it for a great price... assuming the comp was valid this was a money maker.
Yet, the new investor indicated that several investors had looked at the deal and while most passed, one investor indicated that they would offer a very low offer... still a money maker for the new investor... but not what she was expecting.
I knew at that time that the experienced investor knew something the newbie did not and I suspected it had to do with the comps. When I received the CMA it was immediately obvious. The DOMP for the deal was over 430 days. OUCH!
And there-in lay the problem.
The comps for properties selling in significanly less time had DOMs and DOMPs that more closely matched the other... and of course the values were lower by $25K+.
The message here... when you are doing comps... you need to look at both the DOMP and DOM. In fact, in most cases the DOMP is more important then the DOM.
So... what of the Capital Heights deal? If you are interested drop me a line at info@theclubmastermind.com and put Cap. Heights deal in the subject.
To Your Success...
Pete
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