Determining The ARV Yourself

I actually just read that in the Success Academy class I just took! Thanks!

Currently listed comps, the ones that are listed for sale in the area of your property and the average days on market. These have a lot to do with figuring actual ARV. What if there are several in the area of your property of interest and they have been on the market for 120 days. You figure your sold comp ARV and it comes out at $70,000, yet the ones CURRENTLY on the market are listed at $67,500 or less with DOM of 120 days. These are the houses you will be competing against when you put your property on the market. What do you do if you need to move this house quickly? Remember you need to determine what the house will SELL for and offer accordingly!

Michael Mangham
MD Home Acquisitions LLC

I notice that you didn't necessarily take the highest and lowest priced houses of the five to strike off. So just whichever is the first and last that you write down or was this a typo?

Karen

where did you get your comps from and thanks for the advice

The best source of comps sold and currently listed is from a realtor that is VERY familiar with the EXACT area you are looking. Comps can change street to street and block to block, no website can be that accurate. I have purchased in an area that had a $35,000 difference in just 3 blocks. If I had gone out a half mile or a mile on my comps on this property I would have been off by $35,000 on my offer! Know your area!!

Michael Mangham
MD Home Acquisitions LLC

I did not make mention of the fact that it is recent comps, I figured most here who are doing deals or getting ready, know to look for the current one's.

I get my comps from realtors. I know enough of them that I can get comps anytime I need them.

I do not like services such as Zillow or Eappraisal, etc. I do not feel they are accurate and here is why. Comps should encompass no more than 3/10 to 5/10 of a mile away from the subject property. These services more often than not, will include properties that are really too far away to be accurate.

This has been my experience. I understand where your coming from with the way you use your comps to get value.

The way I do it works for me, and like I said there has been a time or two that it was not accurate.

When I am determining ARV, I am doing this to determine if there is enough value in the deal for my investor(s) to consider it. It is more like a guideline in the front end of the deal to determine what's what.

Of course just because a investor likes a certain area, does not mean they will buy it. I know you realize that but for those who are new, I felt the need to mention that.

My system works for me and I have no reason to change anything.

Here is how I find comps...

I get the address of the closest 6-10 houses around the one I am looking at buying and either 1) have my realtor see what they last sold for or 2) look it up on www.totalviewrealestate.com myself.

I never heard the 5 rule before... I like it. Knowing your market is key. I live in a Township there is a canal that splits it...depending on which side you live on there is a big difference in property values. Even though my street runs on both sides...better know which side you are getting comps from.
Thanks,
Barbara

Here are key components to look for:

-Sales within past 3 months; if not enough, go up to 6 months
-Properties in the same neighborhood whenever possible! Very important!
-Properties should be as close to subject property as possible. (don't go over a mile if possible) (this may not be possible in sparsely spread our places)
-Properties w/in 500 square feet of one another
-Properties with similar beds and baths. If there is an extra or one less, its ok, but each bedroom adds value, and keep that in mind.
-When eliminating the top price and lowest price, do them BY SQUARE feet, not the highest and lowest price. To do this, divide the price by the square foot of each comp. Take the highest price per square foot off and the lowest. NOTE: Do this only if you have more than 3 comps!
-I personally like to take up to 10 comps IF they're available.
-Personally, I check out the photos of the comps to see how similar they are, and drive by to make sure they aren't in a different neighborhood.

Using these techniques I evaluated my last purchase at $307K. Actual appraisal came in at $315. I like to be conservative and err on the side of caution, especially when it comes to calculating ARV!

Hope this helps too!

Tammy you are the last person I though I would see on this thread

Am I that unhelpful?

In this market, I use sales in the area as well. Listings are worthless as too many people still think their home is lined with gold. I have made a spreadsheet that adjusts for the differences in the various homes around the area. I like to use 12 because I also follow mathematical procedures and get rid of the lowest and highest, so I am left with 10. I print out my spreadsheet and use it a lot as my basis for my contract. I usually don't negotiate that much because the numbers are telling me the facts. Obviously, I use this spreadsheet when the buyer wants more than the numbers show. If the seller wants less, then I am ready to go. My spreadsheet helps me buy condos easily because they really are a lot alike.

I do the same thing! I made a detailed spreadsheet that I just input the numbers and it does all the calculating of the offers based on the info, rehab and comps I plug in! Great minds think alike!