Today Donny discusses why using Zillow for your comps can costs you in the end. Tune in to find what to do and what not to do when finding deals. Plus discover what tools Donny uses to compare his properties.
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Welcome to the Foreclosure Deals Coach Podcast. The real estate market is shifting. The time is now. The Foreclosure Deals Coach Podcast is your home for the mindset, tactics and tools needed to break through your limiting beliefs and find freedom by investing in foreclosure deals. Don't buy a house, buy a deal. You need to get into this right now. And now your host, the Foreclosure Deals coach, Donny Corrum. Oh, hello. Hello, and welcome back to the Foreclosures Podcast. I am your host and for deals coach Donny Corum, recording live from our downtown studios. Welcome back to the show. Oh my goodness, there is so much going on in the foreclosure investment world right now, and I gotta tell you, if you haven't done so already, I'm gonna ask you subscribe wherever you get your content. All right? Subscribe right here on YouTube if you're watching, but also join me on the Foreclosure Deals Coach Group, where every week I am sharing success stories from my clients who are now. Out there finding, figuring, funding, fixing, and flipping their first deal. Guys, this is a movement. This is a reality. Things are happening so fast right now and you know, when you first start into the idea of coaching or teaching somebody what you know, I gotta tell you, it's nerve-wracking, man. Like you get into this, your intentions are awesome. You're meeting people, you're telling'em what you do. And a lot of people are like, well, that just sounds a little bit too good to be true. Why would somebody be out there finding deals for people that are netting people of profit? Well, above and beyond what I charge for the coaching? Well, here's the thing. I really believe that you can. Help people. And if you make that your thing, you can make a lot of money, change a lot of lives. It's all about the right mindset, which of course brings us to the mindset part of the show as we do each and every single week on the podcast. Let's hop in right now and, and the title of the show, by the way, is Stop Using. I dunno if they're gonna edit this out, but Zillow right to do your cops, a lot of people are coming to me saying, well, Zillow says the property is worth is worth x. Okay? We're gonna talk a lot about why you should absolutely, positively not be listening to Zillow. For anything related to real estate valuation, I do teach in my course how to do a basic breakdown and analyze the comps yourself in Zillow. But I gotta tell you, just using the Zillow's estimate is maddening to me. It was maddening to me as an appraiser. When I was doing appraisals. Then as a real estate agent, I really hated Zillow because it was trying to tell people to determine their own property value. As an investor, I could see how inaccurate was. And now as a real estate coach, Zillow is still the very Bain to my existence. And we're gonna go into details on that a little bit. Stay tuned. But let's go into our mindset quote for the day. Here we go. This comes from actually the Bible. Okay. Blessed is ye. Who listens to Wise Counsel and now this one seems kind of obvious as a real estate investment coach, but the idea behind this quote, and as always, I got a bit of a backstory for you. Okay. I'm working with a client, you know, and I always have clients question my decisions a little bit, that that's just part of the game. When you're first getting into advising anybody on anything, you're gonna have some degree of questioning along the way, and I don't mind that. Okay, but this particular client, Keeps wanting to use Zillow to comp the properties. So when we're talking about a deal, he is like, well, Zillow says it's worth this. And I'm like, well, if Zillow was going to be how you are going to do your deal analysis, then why in God's name would you hire me as your real estate investment coach? That simply doesn't make any sense. Okay. The problem with Zillow is you gotta remember they came in to disrupt the real estate industry as we know it. Their objective was nothing more than the change the game. And listen, I'm a real estate disruptor in and of myself, so I totally support that. I love the idea of changing the game. But in doing so, they attempted to create an algorithm that would serve their purposes. You gotta remember that Zillow's first step was to overprice houses. So they could sell them at retail and it didn't work. So they went to lowering the price of houses so they could buy them at wholesale. For the past few years, Zillow has been purchasing properties up until about about six to eight months ago. Okay. They decided the whole buying houses thing wasn't gonna work out. Forum and they opted out of that program, but the algorithm didn't change. So today Zillow buy design is, is under pricing houses with their estimate because they partnered with a home buying service called Open Door. Okay, so Open Door is now writing offers on Zillow's behalf to buy properties. They don't wanna buy the houses themselves, but you certainly cannot trust their advice as it relates to doing real estate investing. They're not in that business guys. Their business is in selling agents, leads on real estate investing and basically trying to get the clientele out there to. Predict their valuation without doing any sort of professional analysis. Okay. It is not working. It is not going to work. That is not the design of Zillow. So I wanted just, I wanted you to see this article just really briefly here about the, the C E O, talking about how the valuation, and they were buying all the properties with the properties they were purchasing and what kinda went wrong, and I'm not gonna go too far into this, but they decided to shut down their IBU business. Let me open up the screen here for you. Right. So as you can see here, last year, Zillow decided to shut down their own eye Byer business. Zillow offers marking a surprising end to an ambitious home flipping bit that resulted a$405 million writedown, meaning at the time of the article, they had lost 405 million, and if you go further ahead, as they really realize the damage to this, we're talking about billions of dollars worth of loss. The CEO recently stepped down. From being CEO of Zillow, not necessarily because of this. I'm sure there were some other problems, but this was a big issue that Zillow was just simply not prepared to deal with. The fact of the matter guys is that home buying requires a great deal of education, and a software is simply not gonna be able to accurately, completely predict the future value of a property any more than a software in the stock market can be predicted to tell you exactly. What the exit price on a stock is, you simply have to do some of your own human analysis. You can get suggestions, you can get guidelines, but if you're not willing or able to do your own analysis, you're gonna be in real trouble. Ask Zillow. They basically drank their own Kool-Aid, believe that their comps were, you know, the God of it all. And Teller Soaper, kind of the author of this, has some fun with this article. Like he kind of goes into detail where it's like, you know, they invested all this cash into this. It didn't work out. Now we've realized that we should leave professional investing. Two professionals who would've thought, right, not, not, not a big deal. But in the end, what we've learned from this, the estimate is useless. You cannot use Zillow to do your valuation. I cannot tell you how many failed investors I have talked to who lost money broke, even got themselves in trouble, including Zillow themselves by relying on the Zillow. Estimate. It is just silly to use that as your ability to comp properties. The idea behind what I teach and what we do is teaching you how to do your own deal analysis on property, using the tools that I use each and every single week to really get into helping people to do proper valuation on properties. Okay. If you are out there expecting the software to do your job, you are in for a rude awakening, a bit of a surprise and maybe a financial loss. So I'm going to implore you to stop using Zillow, and I got another F word I would put in before that to go with my five s, but this is a family show, so I'm not gonna do that right now. But please stop using Zillow or relying on Zillow. To do your comps, so we're gonna do a quick analysis using the tool that I like to use, deal check. Now, deal check is a tool that you can use to get actual comp for the marketplace. Look at what properties have sold for in the area and make your determination on the value of property using deal check. I'm an affiliate, a deal check. The link is posted below, so if you're interested in getting a deal check application down, you can. It's a web-based app. You can subscribe to it there. This will help you to do your own deal analysis. Let's hop in a deal check right now. You can see here's some deals that I've got actively working and some stuff that I've already closed on, et cetera. I like to have all my analysis here. But I provide this to my clients when they're doing their first deal. Today we're going to analyze the property on 2329 Bon Foy Avenue. Now, this is a fix and flip. Going back to that client that I was talking to you about that wanted to question the comparable analysis of the property we were working on and say, well, Zillow said it's only worth this. Why are you saying it's worth so much more than that? Guys, I have no interest in overselling a property. Okay, you gotta look at it. From my perspective, I am basically a real estate investment coach, a k a advisor, and as an advisor, I really need to be accurate to stay in business for very long. Okay? So when I give a rehab estimate, when I give a a R V estimate on a property, I have already done the homework on that and I am a hundred percent confident in my numbers. Now, markets change. Things change. Life gets in the way. The real estate market is a constantly moving target, okay. But with basic analysis, the market does not move that fast. Between the time that we run comps now and generally the 30 to 60 days after remodel. Where we're listing it, yes, there is some degree of speculation, but the speculation is not very high. So we, cuz we have a good idea. So here we start with the purchase worksheet. We're buying the property for 2 65. Now the irony of it is I presented the property to the client at this number. This is the buy price of the house. I said the after repair value is three 50 based on the comps that I ran. But instead of leaving that to theory, You can flip through here. Look at the other comps in the area. And what we're looking for are properties that are within about a mile. You don't wanna go too much further than a mile. Half a mile would be preferred, but you wanna be close by. Okay? And they sold recently and recently, for right now is somewhere between 90 to 180 days. Okay? So you're flipping through the comp to see what has sold. Recently, that would be a good comparable sale to the one that we're looking at. And then you gotta speculate a little bit based on pictures and condition as to how much yours is gonna sell for. Well, here's one that's, it's a half a mile away. On Listal Street. Ours is a 22 actually, so that's not accurate. There need to update that. But this shows the 21. It went for$410,000, about a half a mile away. Okay, that's a solid con cause that happened on May 31st. So we're talking about a week ago at the time of this recording, this thing sold for four 10. That's a super solid cop. Here's another one, similar square footage. Sold for four 20 fives actually closed on the same date, another one that sold for 3 89, et cetera, et cetera, et cetera. Okay? So in the end, I then come up with an estimate on the property as to what we believe it's gonna sell for. And because I want to be more right than wrong, that estimate is generally about three to 5% lower than what I actually believe I can get for the house. Why? Because I know that if I present you a deal and you do better than the desired$25,000 guaranteed profit that we offer, you're gonna be super happy with the program and you're certainly gonna want to do more deals. On the flip side of that, if we do worse than that, you're gonna be at least a little bit upset. So in the end, the system then does a profit analysis based on my super conservative retail number of$350,000. You see that after a repair value three 50, and it comes up with, with the holding cost time, about four months, a roughly$38,000 profit on this deal. Is that guaranteed? No, nothing in investing is guaranteed, and anybody who says otherwise is not truly an investor. However, if you're doing proper deal analysis and you're not relying on Zillow to decide what the value of your property is, you've got a great chance of being wrong in the right way. What I mean by that is if it ends up selling for more than you thought it was going to, and your profit goes above what you were hoping for, you're gonna be giddy. You're gonna be ecstatic about how great that is. On the flip side of that, if you make less than you were guesstimating, you'll be upset as your coach, I can have that. I wanna make sure my clients are happy, they're profitable, and they're looking to head to their next deal. As soon as feels feasible possible. So going back to our quote real quick, blessed is ye who listens to Wise Counsel, okay? And all I'm saying is if you're going to hire anybody as a professional business coach, you should seriously consider taking the advice that's given, not the software that's out there. If you are gonna do this on your own, that's okay. The idea behind the show is to educate you enough to go out there and take this on, on your own. Okay. But if you're gonna do it, use the right tools to get there. I highly recommend using deal check. You can go to fdc deal check.com to go use my affiliate link to sign up for deal check and start doing your own deal analysis once you have found deals to start working on. Alright, so we've beat up Zillow a little bit today. Right. We've talked about deal analysis. The, the thing about it is, guys, we, you really need to make sure that you are practicing this skillset, okay? Like anything you are going to get better at over time, it is critical to practice your trade here. Okay. You can't just step into real estate investing and hope for the best. If you are gonna become a professional baseball player, you're gonna spend a lot of time in batting practice. You're gonna learn how to fly a plane, you're gonna log your hours, and the more hours you have behind the behind the wheel of an aircraft, the better of a pilot you're gonna become. Okay? All of this is true. It's also true that the more time that you spend doing deal analysis, preferably on properties, you've got some kind of affinity with. I tell my clients, Start with your own home. Put that in a deal. Check if you live in a single family or a condo or a townhome. Little bit harder with apartments, right? But if you live in a single family condo townhome roll, load that into deal check and get a feel for what that property is worth. And I tell you what, if you sign up for a deal check. Join in my affiliate link. Join the Facebook group, post some deal check analysis. Let's talk together about deals that you're concerned about or working on, because again, the better you get at deal analysis through practice, the better of an investor you're going to become. Okay? What we can't do is listen to the c e O of a large real estate conglomerate that managed to lose 400 million by trusting his own inaccurate. Valuation. So please, please, please stop using Zillow's estimates to do your valuation. In my course, I talk about finding cons, actually doing an analysis or sold data, because Zillow is excellent for logging sold data. What it is not good at is. Analyzing that sold data to determine the A R v after repaired value of the property. The better and more accurate you get at determining AC after repaired value, the more money you're gonna be able to make on your investment in real estate. This is a critical part of my five F process. Obviously you gotta find the deals. And I help you with that. We, we use Privy to find deals on market. We've got some website tools that we use to find deals off market. That's, that's not easy, but we know that part pretty well. The next step is analyzing that deal or the figure stage. The good news is, is I'm here to assist you, whether you're a coaching client or not. Okay? This is not me selling my words, but rather a very. Concerted attempt to assist people in doing positive real estate investment deals, the better we all do, the better we're all gonna do as an investment group. Okay? So join the Facebook group. Let's talk about your deal analysis. Sign up for deal check, and let's do some analysis together. You know, if you join me weekly at the live q and a session that I do in the Facebook group, bring the deals that you're working on. I would be happy, honored, even ecstatic to join up with you and evaluate a couple of deals with you in real time so we can really see how powerful this deal check tool is. I've been doing deal analysis kind of off the fly for my entire career. Once I got deal check and I started using that to do deal analysis like we just did on this Bon Foy deal, I believe the minimum we're gonna sell it for is 30$350,000, leaving a minimum profit of$38,000. And my wife who's doing the deal now, because the client decided against it, they decided they didn't wanna trust the numbers, she's thinking she's gonna hit 360, maybe even three 70, and with her top notch interior design skills, I, I, I very rarely prove Laura Roth. I'll tell you that. She's very good at what she does, so if you can live with the minimum value and the comp support that you can go higher, you're in a much better spot than believing Zillow. I would actually, since we're here, let's determine real quick, what does Zillow say this property is worth? Let's see how far off they are on this particular deal. Let's pop the screen again, and I'm gonna jump into Zillow. Remember their motivation and we're, we're doing this on the fly. Okay. This is, this is unscripted. Let's find out what Zillow thinks. This property on Bon Foy is worth based on their very inaccurate estimate. So we're gonna do that. 26 29. Uh, Bon Foy is the name of the property. It's the address, it's taking, its sweet time. Finding it. I don't know. They've found it. Hold on. All right, so we're at 2329 Bon Foy. What happens when you go offs? Script 2329 Bon Foy. What does Zillow think this is worth? Why? Why can't we trust these estimates? Right? Let's pop this up and take a look. They're saying 2 99 right now. Okay, but note the Zestimate range, right? Zillow leaves themselves an out by saying, well, we didn't say it was worth exactly 2 99. They know they're off. Okay? Keep in mind, Zillow is not unaware that they're providing inaccurate data. The house is actually a two bedroom. One and a half bath. It says it's a one bedroom, one bath. The house is actually 870 square feet. That's coming off of our own local county assessor, right? And they're saying it's seven 80 square feet. The data, the way Zillow pulls data is by design inaccurate. Okay, so we cannot use this, this data to get an accurate assessment of the property. If you are in a pinch, you're in the field and you gotta get some data quickly. You can get some basics on the comparable sales in the area, but actually using it for valuation is a huge mistake, okay? And all I can tell you is stop using Zillow to do property analysis. Get a deal. Get a deal checked tool. Go whatever tool you want to use. Prop Stream deal check. Privy has some great tools for deal analysis to get the initial, but when you're really trying to dial in the value of your property, you really want to use the best tool in the market to do that. In that case, it is deal check, in my opinion. I would love to have you sign up for that. Then join the Facebook group and let's do some deal analysis together so we can really make sure you're dialed in on how to use that tool properly. All right guys. That's our show for today. I hope you learned something. Listen, a lot of cool stuff is happening. We've had some incredible client success stories. If you really wanna learn more, please log on. Join the Facebook group, subscribe to this channel on YouTube, wherever else you're watching this right now and become part of the conversation at the group. I would love to help to help you. Find, figure, fund, fix, and flip your first deal. With that, this is Donnie Corum, your foreclosure deals coach, thanking you so, so much for joining us each and every single week on the Foreclosure Deals Coach Podcast and reminding you now and always don't buy a house. Buy a deal. Thank you for tuning in to the Foreclosure Deals Coach Podcast. If you like what you heard here today, remember new episodes are uploaded weekly. Subscribe wherever you listen to your podcast. Do you want more of the foreclosure deals? Coach, are you ready to learn the mindset tactics? And tools required to be a successful real estate investor. If so, click the link below to schedule a one-on-one coaching Call today with Donny Korum, the Foreclosure Deals Coach to determine if coaching is right for you. And remember, don't buy a house, buy a deal.