- The Cost Approach- What would it cost to build the property?
- The Income Approach- Would the property be profitable as an income source?
- The Sales Comparison Approach- Looks at the most comparable sold properties.
I ran across a blog recently talking about a letter that was received by a 70 yr old woman stating that a transfered executive was interested in buying her house. I received a similar letter within the last year. Simply put, these letters are a marketing tactic used to try and negotiate a 1-on-1 sale of your home. "Flippers" with funding will use these letters to try and find people that are in a financial bind and hopefully purchase their home without any competition. If you search the web a little further, you can even get training to buy homes in this fashion from Marco Kozlowski. While I don't believe they are doing anything illegal, it is my opinion that what they are doing is immoral. The best way to get the most for your house is to expose the property to as many possible buyers as you can, normally the larger the market (or the higher the demand), the more the property is worth. I have investment property and have flipped homes in the past, but this letter tactic is misleading and untruthful (a scam) and has serious potential to hurt individuals that sell their home in this fashion. Before you consider this option, call in a professional Realtor to provide you with a CMA (Competitive Market Analysis). A CMA is very similar to an appraisal, but has a different primary focus and only uses one approach. Appraisals will normally use at least 3 different approaches to establish property value: