Concept
Outlier Property
What it is
An outlier property is one that doesn’t look like everything else in the neighborhood. Wrong size, wrong style, weird lot, something that makes it not computable.
I never buy outlier properties. That’s a hard rule.
The reason I split my buy box into two geographic zones — Heart of Chattanooga and Outskirts — is because of this exact issue. In the city, I cap at around 1,800 square feet. A bigger house in the city is an outlier, and I never buy outlier properties. In the suburbs, split levels and basements might push a house to 2,600 square feet that would be perfect for me. So the outskirts list runs a little broader.
I also call these odd birds. It’s the same thing — a house that just looks different than the rest of the neighborhood.
Why it matters
The beauty of running comps is that I know with a high degree of likelihood what a house will sell for because it looks like all these other ones that sold for that same amount. If I have an odd-looking one, how do I know? I don’t know how to account for things that haven’t happened already.
If you can’t comp a house with confidence, you can’t calculate your ARV with confidence. And if you can’t calculate your ARV with confidence, you can’t calculate your max allowable offer with confidence. The whole deal filter falls apart.
Flood zone properties are a version of this, too. In some places, flood zones are totally normal — like Florida where most houses are in them. It’s bad to buy in a flood zone when most of the houses around it are not in one. Because then it’s an outlier. The extra flood insurance cost makes that house worth less than the comparable ones that buyers don’t have to pay for, and that goes straight to the monthly payment people are doing the math on.
Rural properties are another version. Those are hard to comp because there are lots of different factors. I’m not smart enough to figure out all those factors. I can figure out: that house sold, there’s another one that looks just like it that’s the same size right next to it, probably going to sell for the same amount. Rural makes that comparison hard.
How it shows up
The seven DOAs — dead-on-arrival red flags — include what I specifically call odd birds: houses that just are different than the rest of the neighborhood and aren’t computable.
Other DOAs that overlap with the outlier problem: flood zones when surrounding houses aren’t in one, major easements running through the property, zoning conflicts like an as-built duplex in a rezoned R1 area, ceilings under 7.5 feet. These aren’t just cosmetic issues — they’re structural reasons why the house can’t be bought and sold the same way the comparables can.
If you’re building your list in PropStream or Property Radar and filtering by square footage, you’re trying to stay inside the outlier range without realizing it. That’s what the filters are doing — keeping the properties computable before you ever set foot in them.
Related
arv, comps, buy box, dead on arrival, neighborhood, max allowable offer, flood zone