OfflineYou need to calculate the $/sqft for the comps first.
it is based on $/sqft, not sales price
With high end homes, there is more margin for opinion of value
This formula is used more for smaller homes, when establishing the value for luxury homes, you need to consult an appraiser and an auctioneer to get their opinion of what they think the house will sell for at a Live Auction they will you know what you can settle for on the short sale.
$6,580,000 = 4170sq $/sqft = 1577
$3,450,000 = 3850sq $/sqft = 896
$2,800,000 = 3510sq $/sqft = 797
$2,250,000 = 2360sq $/sqft = 953
use 896 because this is 3rd highest comp
896 x sqft of subject property (not average of comp sgft)
Minus $12k for repairs (3/3)
ARV is not your offer price. ARV is what the property will appraise for. you want to figure it will sell for quickly 80% of what its worth (if in very good condition- in your example it is in very good condition because 12K in repairs would cover paint on a home this big)
Short Sale Offer Price is the average of 3 LOWEST comps with highest DOM minus repairs from licensed contractor multiplied by 80%
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
Hi Sissy,
How do you figure out ARV on a home that needs major repairs and all of the comps in the area have been purchased by investors that also need major repairs so right now they are all way below what one would pay for them after they were all "dazzled" up and move in ready. I have come across several homes like this and I am stumped on what I should pay for them in order to wholesale them to my investors.
Niki
Hi Niki
I heard Donald Trump talking about this very thing. He said if you look at the housing prices from 2005 you will find that they are very close to what they are right now in todays market.
I do know that Zillow has a graph showing housing prices from back in 2004 up to now days. It might make a good comparision.
Other than that...the ARV's are not going to comp out more than what you are seeing the houses are being bought for right now by investors.
Maybe someone willcome along with a better explanation.
Sissy
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
Thanks for your input Sissy! Maybe I will throw it out there in a new topic and see what kind of answers I get because I am really stumped right no on what to compare them too.
Have a great weekend,
Niki