163. Stop Using Zillow to Value Properties — It Almost Bankrupted Them!

🌟 How Real Investors Determine Property Value — The CMA Explained🌟

Welcome to the Ekabo Home Financial Freedom Mastermind Webinar! In this session, host Niyi Adewole breaks down how real investors and appraisers actually determine property value — and why trusting Zillow could cost you thousands. With live examples and real appraisals, this episode gives you the exact framework his team uses across Georgia, Florida, and Texas.

🔥 Quote of the Day: "Investors don't hope on price. They run the ARVs based on the CMA and arrive at the true value." — Niyi Adewole

💡 What This Means: Relying on a Zillow estimate is not a strategy — it's a gamble. Real investors use Comparative Market Analysis to know exactly what a property is worth before they buy, rehab, or refinance.

🎙️ What You'll Learn:

1. Why Zillow Will Get You Into Trouble: A Zestimate can be off by 5–20% or more. Zillow nearly went bankrupt in 2021–2022 relying on its own estimates when buying properties through its iBuyer program.
2. What a CMA Is and How to Run One: Find recently sold properties similar in size, bed-bath count, and location — then make adjustments to arrive at the true value. Niyi walks through this live using real properties on FMLS.
3. The Golden Rules of Finding Good Comps: Sold within the last 3–6 months, within 1–2 miles, with similar square footage and bed-bath count. The tighter the comps, the more accurate your ARV.
4. Above-Ground vs. Below-Ground Square Footage: Above-ground is valued at roughly $50 per square foot in adjustments. Below-ground drops to around $20 per square foot in Georgia — a costly surprise if you're not prepared.
5. How to Make Adjustments Like an Appraiser: Add $10,000 for each extra full bathroom. Add or subtract $5,000 per bedroom. Multiply square footage differences by $50 above ground and $20 below ground.
6. A Real BRRR Deal Walked Through Live: Niyi's team helped a client buy a bank foreclosure for $450K with a $200K rehab budget and a conservative ARV of $850K. It ultimately appraised for $1.15 million — allowing the client to pull all their money back out and walk away with cash.
7. Finding the Highest and Best Use: A 3-bed, 1-bath over 1,200 square feet almost always has room to add a bathroom, dramatically increasing the ARV. Over 1,600 square feet? You may be able to add a bedroom too.

🏡 Key Takeaways:

➤ Never Trust Zillow Alone — Run a CMA before making any offer, especially on a flip or BRRR deal.

➤ Above Ground and Below Ground Are Not Equal — In Georgia, below-ground square footage is valued at roughly half of above-ground. Know this before you buy.

➤ Tight Comps Win Every Time — Same neighborhood, sold within 3–6 months, similar size and bed-bath count. The tighter your comps, the better you can negotiate.

⚛️ Why This Matters:

Whether you're flipping, BRRRing (Buy, Rehab, Rent, Refinance, Repeat), or just buying your first investment property, knowing how to determine true market value is the skill that separates investors who build wealth from those who lose money on bad deals. The CMA is not just a realtor tool — it's your unfair advantage in every negotiation, every refinance, and every exit strategy you'll ever execute.

🗓️ Tune in every Wednesday at 7 PM Eastern! Don’t miss out on our journey toward financial freedom through smart investments.

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Niyi Adewole is a licensed realtor in Georgia, brokered by EXP Realty. Feel free to reach out at Niyi.Adewole@exprealty.com if you would like to work with an investor friendly real estate agent.

Transcript

Welcome And Weekly Format

SPEAKER_00 0:00

Welcome to the Financial Freedom Mastermind Group Podcast. Here we're all about breaking free from the 40 to 50 year work pride and accelerating our journey towards financial freedom. Join us every Wednesday at 7 p.m. Eastern as we explore different types of investments that can fast track your path to financial independence. We serve as a hub for connecting with fellow members during our sessions so you can share successes, ask questions, and keep the momentum going.

SPEAKER_01 0:27

Good evening, everyone. My name is Nigi Adawale, team leader of the Akaba Home Real Estate team. We also manage short-term rentals, and I'm happy to be joining you here on this Wednesday, the last Wednesday of May, which is crazy because this year's gone by quick. And so I hope that you have been accomplishing the goals that you set forward at the beginning of the year. And if not, you still have seven months to achieve it if you start

What A CMA Really Solves

SPEAKER_01 0:51

now. And so today we're going to be focusing on a CMA andor the comparative market analysis, which is what a lot of investors use to determine the value of a property. Now, when you look at a CMA, right, if you've been making offers based on a Zillow's estimate, you're either leaving money on the table or you're overpaying, right? Tonight I'm going to show you how real investors and appraisers actually determine the value of a property. It's the same way that our team values properties for Burr deals as well as flip deals for clients across Georgia, Florida, and Texas. We don't necessarily focus too much on this when we're looking to buy and hold because we have an appraisal contingency, but for fix and flip and for Burr, you better know what it's going to sell for afterward. And so we're going to dive into this quickly. I'm going to actually share my screen and start walking you through examples of appraisals that we've gotten before that are de-identified. And I'll show you a live example and pick a random property here that needs some work and show you the after repair value and how we would work to determine that for the clients that we have. And so if you got any questions as we're going through this, go ahead and throw it into the chat or in the question and answer section and feel free to make it go from there. And so

Why Zestimate Can Mislead Investors

SPEAKER_01 1:59

when you're looking at this, the first thing I talked about was Zillow versus a comparative market analysis, right? A zestimate is algorithm-based, it's averaging the neighborhood data and it's not looking at the specific property and the features that are in that property that may not be written down for it. And so a Zillow estimate can be off by five to 20%, maybe more. And many of you may remember back in 2021, 22 when there was a whole bunch of like i buyer talk, right? That's when Zillow and other companies like that were buying a lot of properties based on the zestimate. And Zillow almost went bankrupt based on their own zestimate because it's not as accurate as running a CMA and actually getting a feel for that house and seeing, okay, what's the highest and best use and what is the true value of that house. And so investors don't hope on price, they don't look at the zestimate and try to use that. They run the ARVs, right, based on the CMA, which is the comparative market analysis that I'm going to show you, and they arrive at that final cost. So if Zillow isn't what it is and it's not the answer, right? We have to really focus on the pieces that are going to determine the value of your house. And so I'm going to share my screen. And when you're running a comparative market analysis, if I can figure out the share, here we go. Okay. So you should be able to see my screen. Now first want to show you some examples. When you're running a comparative market analysis, you want to try and choose properties that are very similar in their makeup. Ideally, if you can find an exact property, that's the most ideal. One where it's like, hey, cookie cutter. For example, when you're doing townhomes or condos, that's very easy to comp out because every townhome and condo within that community is more than likely the same or very similar. And so you just look at the recently sold and boom, that's your value. And if somebody is willing to pay a little bit more for the next one, your value has increased. With homes in more luxury neighborhoods or homes that are more unique, it's harder to find the comps. And when you're looking at residential properties that are single family up to a quadplex, all they're looking at is what are other single duplex, triplex, quadplex selling for in that area, what's recently sold, and that's how they base your value. And so this

Reading An Appraisal Like A Pro

SPEAKER_01 4:01

is a home that we actually helped the client with. I'm actually going to be going out to go see the finished version of it tomorrow because they crushed it. But we helped them, if you look at the bottom of this, and I hope you see my mouse, we helped them purchase this back in April of 2025 for 450K. This was intended to be a burr deal by rehab rent refinance repeat deal that they're going to burr into a short-term rental to maximize the income they can make on it. This is a client that we've already helped buy one short-term rental that was more turnkey and helped them get it designed. And now this is their second one where they wanted to put some dollars into it, be able to get those dollars out and keep going from there. And so we bought it as a bank foreclosure for 450K. It was listed at 550. So we were able to negotiate during due diligence and get a lot off. And the original rehab budget was about 200k. And we estimated conservatively that they could come out on the other end at an 850K value, which is good. That means that once you get that refinanced, you're essentially getting the money that you put in back out. And now you can just rent that thing out. The cool thing about this is one, they did go over budget because they added other things and did a bunch of change orders, but they got two and a half times the value. And this home actually ended up, you don't see it on here, ended up appraising for 1.05 million, right? Or no, yeah, 1.15 million, right? Which is pretty good. When you're looking at this, this is the page that appraisers focus on. First and foremost, you want to try to find properties that are close to you and like kind. For this one, because it sat on three acres and it was just a unique property, had over 6,000 square feet. If you count the upstairs and the downstairs, they had to go way further out to find this. And appraisers are more open to going further out when you're doing a refinance versus when you're purchasing a house. When you're doing a refinance, they know it's secured by this property, they can see it. When you're purchasing a house, they really want to see the comps be within two miles. But I wanted to show you one of the outliers here. When you look at the square footage, they're always trying to find similar square footage. And so square footage is located right here and they're giving you the above ground square footage and then they give you the below ground square footage. Now, this is critical. This 6,000 square feet is not counted the same. When you look at above ground square footage, typically appraisers, when they're making adjustments between houses, are going to be roughly $50 per square foot for above ground square footage. Once you go below ground, it significantly drops off, right? Like they don't count it as the same whatsoever when you go below ground. So the example I'll give you is when you're looking at, here we go. Okay, cool. So when you're looking at this piece, right, and the adjustments that were made for the above ground adjustment, this one's 4,030 square feet, so 4,030 minus 3530. And so you never touch your subject property, which is the one that you're looking at. You always adjust the other properties to match that. And so you need to adjust this property, this other property, to be 500 square feet less. And so you'd subtract that. And if we did that times 50, times 50 would actually be 25,000 less. They took a little bit less off, which is amazing, probably because the quality of this house, they just did 16,500 divided by 50 or 16,500 divided by 500. They took 33 dollars per square foot off, which is not bad. That's a win when you're going to refinance. Now for the basement, you're looking at you know 3,003, 33, 34 square feet. And this one only had 930. And for the basement, what they actually gave them minus three, three, three, four. If they had done that fifty dollars per square foot for the basement, they would have given them 120,000, but they only gave them 54,000, right? And so that 54,000 for the basement when you divide it, is roughly 20 per square foot. So they gave 33 per square foot for the above ground, and they only gave 20 per square foot for the below ground. This is something I had to personally learn as I was going through and doing flips and things of that nature. And it's it's a tough lesson if you're not prepared for it. Now, this one, we were happy to get that appraisal much higher than we expected, and that allowed these guys to walk away with cash, right? On top of the money that they spent, they got the money back and they walked away with cash, and it's going to be a dope short-term rental. But that's one of the gotchas, right? Above ground is kind of differently than below ground, and so on and so forth. As you go down the line, you can see those adjustments. They also gave some adjustments for the number of bedrooms as well as bathrooms that are above ground and below ground. I'll show you how we do our adjustments, right? And we're pretty conservative in the way that we do it across the board, and we've been pretty good at getting this done across the board. And so, okay, so that's the first example. The next example is this one. So this is a house that did appraise. I want to say it appraised for the exact value that we got it for. There we go. And and you can see that these ones were a little bit closer to the actual comp. When you look at how these were laid out, right? You've got three bed, two and a half on the upstairs here. And this first comp has three bed, two and a half on the upstairs. The square footage is 2287 versus 2200. And so when you look at the purchase price, this is a home that closed for 575. This one's for 574. We're pretty close. And conservatively, right, we're only at $250 per square foot, whereas the comp that they've put in here is at $261 per square foot. So this is pretty good news. And after they did their adjustments, yes, it went down a little bit based on the square footage that they had below ground because they had more below ground. But this is a good comp for us when you're looking at the purchase of the house. And then they had a few others that they need to make adjustments on, but this is more in line when you look at the distance that these are, right? This is all within, you know, one or two miles of the property. The other one was unique because the property was huge and you had a lot of square footage and a lot of acreage, so they had to account for that. But typically it's going to be within two miles, is what you want to look for when you're running a CMA, especially when you're doing a flip. You want to find the close comps that are very, you know, able to point to when you're giving it to that refinancer or giving it to the appraiser so you can help them do their job. Okay. Now I

Live CMA Setup And Comp Rules

SPEAKER_01 9:32

want to get into actually showing you how we kind of coach our team and do CMAs as well using a live example. So I put in a simple search on FMLS and I put in 500k or less for a property, and I wanted the fixer upper property. So I'm just gonna find a property that needs some work, right? And we're gonna run the numbers on it. Ideally, one that has some items in here that we can actually look at. So this is a three, two, four, two. I want to do something like three, one, five, three. You got above and below ground. Let's go with three, three indicator. Let's go with this one. I'm maintaining, let's take a look at pictures. This is definitely not a fixer, but we can still use it. Countertops or composite, you could you could update that. So we'll use this one, right? So this is a three-three, been listed for 188 days. So it's been out there for a while. They've lowered the price a little bit. Let's pull this. We use a system called NARPR, which is available. I want to say in most states, but this is how we go about running CMAs on properties that we want to purchase for rehab or for Burr. Now, this one, full transparency, is not gonna have a lot of rehab on it, right? Because this is, you know, mostly cosmetic, but I'm still gonna run a CMA just so you can see how we do this. So it's a three-bed, three bath. They've already updated the square footage to 2895. Yep, 28.95. Um, it's got one basement, 0.52 acres. Okay. So we're gonna confirm those facts, we're gonna find some comps, and we wanna first start really tight. So within the last three months is where we're gonna start, and within one mile is where we're gonna start, and then we can expand out from there. So I'm gonna search for recently closed in the last three months within one mile and within the last three months. You do not want to look at the actives, the actives can be deceiving because that's showing you, like, hey, you know, this property is listed for 575, but doesn't mean it's selling for 575. What I do like is some of the pendings, right? When I look at some of the pendings, I actually like calling these agents and asking them, hey, how much traffic did you get and things of that nature to understand the demand for an area and that stuff that we share with our clients? But for this one, this is a 4-2, so it's a little bit different, right? But you want to look through the pictures and see does it match up? So you got carpet in here, it's a little bit older, not as updated as the other one. So I'm gonna see if we can, but it has an updated kitchen, better countertops. So I want to see if we can find better comps, but I'm gonna hold this one to the side for right now. This one is probably not a comp. It's a five-bed, three bath that is not even close. And when you look at the actual house, you've got garages on there and all the things. This looks like more of a new building, so that's not a comp. So look at this one 227, it's a 4-3. That's tough. Um, but we can take a look at it and see what this one looks like. Say this one's actually closer, closer to this. Yeah, closer to it. We need to make an adjustment for the extra bedroom, right? And for the square footage, but and for the kitchen. I think this one's a little bit nicer, but I would pull this in as a comp. It's a real comp. See what this one looks like. This is not a comp. It has a garage. This looks like a full-on renovation, luxury monoplank throughout. I'm gonna say no on that one. Let's look at some of these ones that are recently sold or pending 420, a three two pending price of 420. This one looks just a bit more updated. Yeah, I am not confident in that one as a comp. Let me go back a little bit further. Let's see, six months. So we got this one for 190. We got this one for 335. Let's see. 53, 4, 4, 4, 3, 3, 2. I'm gonna pull this one in and make adjustments. We're gonna pull in the 1900 because this is literally next door and make adjustments there. What is this one? 3, 2, 2,900 square feet though. And it has a garage. Okay, we're gonna rock with these ones. So we have three comps that we're gonna roll with. So I'm gonna go ahead and update valuation. And then now we're gonna start making the adjustments, which is where the magic happens. And so when you look at these comps, right, from a bath standpoint. If you have one additional bath, like full bath, we typically add $10,000 in value. If you have one less bedroom, we typically subtract $5,000 in value or add $5,000. Reason being, it's not that hard if you have the square footage to add a bedroom. That's just some walls, making sure you got a window and making sure you got a closet. And then for that full bath, we're gonna add another $10,000. And then the subtractions come when you get to the actual square footage. Okay, so for the square footage, right, some of this is below ground. Keep that in mind. So for this house, you have the lower level, which is a one-one, and they haven't given us the square footage of the lower level. So I'm just gonna call it all even, right? And just divide it by three. So 2895 divided by three, that would give me 965 on the lower level. And so if you're looking at 965 on the lower level, right, because this is all above ground square footage that we're looking at for these other homes. So 2895 minus 965. That gives you 1930 minus 2390 times 50. So 23,000. Okay, 1930 minus 2114 times 50 equals negative 9200. And then for this one, 1930 minus 2442 times 50 would give you negative 25,600. And again, this is based on that above ground below ground. They didn't necessarily space it out on here, right? Which they should have because that is super important. Okay, so we're good here. And then for the basement, we can give additional value, right? For the basement, I'm gonna cap it a little bit. I'm gonna make it more of I think the other one that we looked at was what $20 a square foot. I'm gonna go with that for the basement and same over here. Okay, keep in mind for a smaller property, this may go down. Okay, so we have those pieces. Now we're gonna look at the rest. Some of these, I want to say they had, I want to say one or two of these had a garage. Give me one second. 1930 Meadow. Okay, no garage on that one. The next one was 2747 Claire. Okay, we're good in the garage. And then the last one was 1669 cartel or Carter car report, no garage. Okay, cool. So this is the basics here. The next thing I would do is just go ahead and update the valuation, and that puts us right at 283 for what you're looking at here. Now, there's some of these that are way better, right? Like there's two of those properties where it's just like, hey, it's levels above this, but this is where the CMA is pointing us toward for the actual value of the property, and where they're listed right now is about 350, right? And so you can see it's been listed for 188 days and it started out at 379. I think this is one where if they put in the time and effort to just finish it out, like this looks cool, but updating the kitchen, uh, a little bit better staging, definitely updating the kitchen, right? That's a piece that people are probably walking in and saying, Hey, if I'm gonna need to put, you know, 15, 20k in the kitchen, I want to see that reflected in the price and updating the bathrooms as well, because this is that old composite. And this is not a crazy, crazy expense. But if these pieces were updated, just the bathroom counters, right? And the the vanity to make it more modern, as well as the cabinets, as well as the kitchen. I think it could sell for that 350, 375 range, just based on the square footage and all the things that are within here and what other homes have sold for. But without that, it's tough. But the cool thing about this is it does have an in-law suite, which I didn't know. Um, this may actually be when I circle back to because it's been sitting for a while. And so uh everybody forget about this property. But that's how we run the CMAs when it comes to identifying hey, properties that are good for a flip. Now, ideally,

ARV For Flips And BRRRR Planning

SPEAKER_01 16:09

we want to find ones that need some more work, and that's usually on the lesser end, right? And so if I were to go over here to a much cheaper property, what we would look at here is not the same thing. What we're looking for is an already fixed-up house, right? And then we're gonna compare that to the cost of getting this one done. And so, right now, this is a three-bed, one bath, it's 1264 square feet at over 1200 square feet. This is good size for having a three-two. So I would run the comps on this as if it's going to be a three-two, because that'd be the higher and better use for it, right? There's not many people buying a three-bed, one-bath house um that we work with. And so for this one, pull it back in. I'm gonna go for a three, two, twelve hundred and sixty-four square feet, and we're gonna create a report. And this one I'm gonna move a little bit quicker on it. Okay, so this has been sitting for five days, not long at all. We're gonna run the CMA, confirm facts. We're gonna run this as if it's a three, two, right? Keep everything else the same because essentially you're doing a gut rehab here. We're gonna go six months. I'm gonna go within one mile, we're gonna search. Okay, let's go here. This is a three, one that's sold for 250. We can make the adjustment here, not a crazy rehab. This is just pretty basic. So we can make the adjustment there. So three one sold for 250. Uh, ideally, we want a three, two. Three, two is pending. Let's see what this one is. And I want to see if this is a fixer up or a pending. So this one's already done. So it's a three, two that's pending, 1350 square feet. It's good. Okay, and then let's pick at least one more. You want to have at least three comps. So another three, one, but we're looking for a three, two, four, three, three, two, a thousand square feet. Okay. Reasonably renovated. Okay, so we're gonna go with these. I'm gonna update the valuation, we're gonna adjust the comps, and so we're all at three, two. Now we're going square footage, right? So it's about a hundred. We'll call it, I'm gonna round it up. So it'd be minus five thousand. This is about a hundred in the other way, so plus five thousand. This is two hundred and fifty in the other way, so twelve, five hundred. And then all these other things are relatively similar minus the partial basement. So minus partial basement, I'm gonna give it minus five thousand. And so you'd be looking at if you fully renovated it and made it a three, two, you'd be looking at, let me make sure this one we're gonna give five thousand for three one or ten thousand for a bathroom. You'd be looking at two forty-eight or two fifty, right? And you can see that these comps are all pretty tight together. And so this is one where you you're pretty reasonably sure, hey, when I renovate this, it's gonna sell for 250. So now the question is what's the cost to renovate it? And this is something that we usually estimate based off the photos, and then if we can get it under contract during due diligence within the first, you know, 24 hours, we send out the contractors to actually give us the quotes to tighten it up and go from there. So, in that first example that I showed you with that house that we helped those bot guys buy for 450 that eventually was refinanced for 1.15 million, which is amazing after they did the work. Uh, that's one where we conservatively estimated uh that it was gonna cost about 200k to do the rehab. The quotes came in and it was like 215, right? So a little bit higher. But we conservatively estimated that they were gonna be able to refinance it at 850 and they were able to refinance it for over a million. And so this is how we run those upfront numbers when it comes to getting after that value. And you ideally want to have the same neighborhood, you want to have it sold within the last three to six months, similar square footage, right? You can adjust for square footage, but similar if you can find it, and the same bed bath count. And then if you're looking for a flip, especially, you want to find the highest and best use of that property. If I see a property that is like this one, a three-bed, one bath over 1200 square feet, I know there's space to add another bathroom and to maximize it. If it was over 1600 square feet, I'd be looking at adding another bathroom and adding another bed to make it a 4-2 because there's plenty of space to make it happen. And there's probably like an unused area, like a family room or something that we can close off and turn into a bedroom to make it worth quite a bit more. And so I'm gonna go to QA and see what questions we got. Oh,

Why Basements Appraise For Less

SPEAKER_01 19:43

cool. This is a good question. Why is there a big drop off with below ground square footage if the basement is fully finished with heat in there? This is one that I had to come to terms with in Georgia, right? I'm not exactly sure because again, the one that I'm mentioning, they put some they put a whole theater in there, they've got game rooms, all the things that you would want in a luxury B, but they just don't count the same. They count the above ground much more than they count the below ground. And so I've had certain instances, right, with houses that I'm looking at where, like when you look at, for example, we had a house that we helped somebody purchase last year that turned into a bit of a flip, right? And when you looked at all the comps that they had that the appraiser pulled up, if all the square footage was above ground, it would have appraised easy. Because more than half of the square footage on this house, and it was out in Stone Mountain, was below ground, it appraised 20k below. And we had to go through a whole negotiating with the seller to kind of get that price dropped. But I'm not sure, it's just a difference in in how they value it above versus below. And it's specifically a Georgia thing that I've seen. You don't see that as much in the Northeast, right? Because I think space is limited. But in Georgia, I've definitely seen where below ground is not counting the same at all. It's usually, you know, about half. But good question. Anyone else have any questions on this? Okay.

Wrap Up And How To Get Help

SPEAKER_01 20:58

Well, thank you for joining the Akaaba Home Financial Freedom Mastermind call. And if you need any help running CMAs or want to dive deeper into this, feel free to reach out to our team at acabahome.com and we will make it happen for you. Thank you guys. Join us every Wednesday at 7 p.m.

SPEAKER_00 21:13

Eastern as we explore different types of investments that can fast track your path to financial independence.