By Brett Woolley
Author’s email: BrettW76@cox.net
Investors are flocking back to the Gilbert, Mesa, and Chandler AZ real estate market in droves. Homes in the lower price brackets, with the exception of Short Sales, are selling fast with multiple offers. Most real estate investors seek capital gains over cash flow, or in other words buy low and sell high rather than buy to rent. With all of this activity, how can today’s investor be more efficient in finding target properties?
Let’s look at the numbers! As an MBA REALTOR® with statistics training I offer my investor clients something that no one else has—the “statistically enhanced” investor report! This report first breaks down the market by price segment and zip code. This is important to do because a good target price per square foot in one zip code may not be appropriate for another zip code. You have to do the analysis.
Second, the report calculates the average Sold Price per Square Foot for that price segment and zip code over the past four months. This number is vital to get a picture of what the “market” really is. Next the report calculates the Standard Deviation for the Sold Price per Square Foot. The Standard Deviation measures the average distances from both sides of the mean or average. An investor wants to buy properties at less than the average Sold Price per Square Foot. The question is how much less? The Standard Deviation Bell Curve answers that question. See Exhibit One.
Homes that fell in the group that is one standard deviation less than the mean were probably good deals. However, the real place to be is in the group that is more than one standard deviation less than the mean. These are the properties that are statistically disconnected from the market and offer the best capital gains potential. Therefore, the investor report creates a list of properties where the MLS advertised List Price per Square Foot is more than one Standard Deviation less than the average Sold Price per Square Foot. This condensed list saves valuable time by targeting the properties with the highest return potential.
A final key element of the investor report is that it completely strips out Short Sales from the equation. Short Sales are eliminated from the analysis because they distort the data with non-approved MLS list prices, a major factor currently plaguing the appraisal industry. For an investor, they are a severe waste of time due to the typical months of waiting for a bank’s response to an offer. I am happy to provide the Statistically Enhanced Investor Report to my clients for any Phoenix area zip code that interests them. If you are an investor and are becoming weary spinning your wheels looking at too many homes and would like a more targeted approach, then give me a call!
Brett Woolley is a professional Buyer’s Agent specializing in helping clients buy homes in the Gilbert, Mesa, and Chandler AZ areas. Contact Brett at 480-236-2735 for a no-obligation buyer consultation.
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