Determine ARV without using an agent

Hi Bernard,

FMV, Fair Market Value IS ARV, After Repaired Value. They are both an opinion of value at that point in time. The comparables that have "sold" will give you an idea as to what that is (if there is a FC in the comparables, it will bring your value down. If you have a Realtor you like, talk to them about needing 10 or so BPO's a month on random houses you find. Let them know you will be using them to sell some of them you buy & they do Not need to go out to the property, but just to run comps from the MLS quickly, (that is a BPO - Broker Price Opinion ).

Or.... you could just call a Realtor off a sign in that neighborhood & ask them general questions about their listing. After asking them to send you the MLS for their listing, lead into sending you a "Recent Sales Report" with the yr. & sf you give them in that area to help you make a decision on what price you might want to offer if you should decide to.

Also, most County Property Appraiser sites have a "Sales" tab & you can do some research on a specific area by using the Lot - Block - Unit #'s in the legal description of the property. I wish ProTrend had a Sold Search area. Hope this helps some. Later Debra

People tend to think that FMV and ARV are the same thing and they actually are different.

ARV is After Repair Value, meaning when everything in the house is all fixed, good as new, this is the value. FMV, Fair Market Value, is the value of the house RIGHT NOW, sold in the condition that it is in before any further repairs are done. If it needs no repairs and is already good as new the two amounts are the same. if repairs are needed, they are not.

Hope that helps to clarify.

Karen

I actually work with a couple of investors who will send me a list of addresses and ask me to get them some comps and determine ARV for them.. and they typically Paypal me $80-100 per property.

Some people might say "What, why? Its just a couple hours at the computer, blah blah..." but those who have worked with me know that as both a Realtor and investor, I know what both sides are looking for. I don't just pull the last 5 sales near the house that are about the same size and email 'em over. I scour thru dozens of recent sales in the area, finding the properties equal in age, number of bed/baths, lot size, garage size, AND whether the property is updated or not. And if it is updated, is it done correctly, or do they consider the hideous maroon tile in the kitchen and bright new blue paint in the living room to be an "update"? If it is not a home that would appeal to the general market, I remove it or adjust accordingly. It's hard to do that without access to the MLS.

Running a quick comp report or checking tax values is easy.. being thorough and weeding out the foreclosures and run down homes to come up with an accurate number is not. Until you feel comfortable enough estimating an ARV on your own, consider finding an agent who will do that for you. Make sure to compensate them for their time, and they wont feel cut out if the deal is FSBO. As long as they arent drawing up contracts or submitting offers and managing title and mortgage info, there's no reason they should feel cut out. Good luck!

i learned something there awesome. Yes sold comps a must, must know how to comp out props that an agent sends you which I believe is covered here & in Dean;s books. Read, study & then act!

Make sure you get a 2nd set of comps too. ARV is everything you must know what prop is worth.

It is important to make sure that your comps are actually that. If you are looking at determining the ARV for a 3BR/2 BA, then your comps must also be remodeled 3 BR/2 BA within the same neighborhood or at least in similarly priced neighborhoods. Additionally the type of remodeling must also be considered.

My favorite FREE site is zillow.com
When you go to Zillow don't just use the "Zestimate" they show.

1.Type in the address on the front page.
2.After you enter the address, there will be a red,blue,grey dot tab.
Click on that on only select the yellow "recently sold" tab.
3. Filter the results to the same beds/baths of your subject property.
4.After you save, a list of houses that have sold in the area will pop up.
You can zoom in and out of the map to see more houses.
Try and find houses that have the same bed/baths and near the same sqft.

The first deal I bird dogged was thanks to this because I went to my buyer and
told him the ARV was $175,400.00 and he pulls out a list from the MLS saying
"Yeah.. my list here shows an average between $170,000-181,000.00"

I almost went "PFF.. I was right!? Oh yeah yeah I know."

I have 2 agents working with me on finding me deals and I always asked them for comps on a property thats not on the MLS which comes from my bandit signs. Both agents never tell me no when I asked them for comps because I tell them if I buy the house I will have them list the house on the MLS to sell when I'm doing repairing it. Also I check Zillow myself for recent sales on the property to back up my agents comps. Now I don't go asking my agents daily for comps on properties that not on the MLS because then you might burn them out. I usually asked them like once a week but as soon as you start closing deals with this agent you can ask them daily for anything and in most cases they would do it because your making them money.

Our Realtors in my REIA group always find comps for us. There are about seven of them, so the REIA again is a great source for finding help in re investing.

Redfin recently conducted a study of the reliability of Trulia and Zillow. Their report stated that these two sites are missing around 20% of the active listings and that it takes 7 to 9 days before a new listing is uploaded. Additionally, 36.5% of their active listings are no longer for sale.

What does this actually mean? In active markets, not seeing a listing for 9 days could very well mean that great deal is already gone. What you are looking at are the mid-to-high priced homes that have no wholesale potential. On top of that, 35% of your time is wasted because you are researching listings that no longer exist. And if that wasn’t bad enough, for every 80 homes you considered, you missed seeing 20 possibilities. Does that sound like a good business practice?

How about estimating property value? Zillow can provide you with a free estimate. But how accurate is their estimate? According to Zillow’s own Zestimate data accuracy report, they have a median error rate of 6.9%. In fact, further down in their report they state that only 38.3% of the time are they within 5% of the actual sales price. The reality is that they are 20% off the actual sales price 84.7% of the time.

In the wholesaling business, a 20% mistake in pricing is suicidal. Follow the Zestimate’s price recommendations and you could very well lose all your profit on every deal. You need to base any purchase decision on actual verified comps along with active listings from the local MLS.