After Repair Value Evaluation?

Question

I seem to be having a hard time trying to understand how someone can determine the ARV. Is this something you learn through experience?

John Thedford · Answer

Experience and research will help you become better at determining values. I see you want to operate as an unlicensed broker? You want to make representations of value to others? Here is what I tell people considering dealing with unlicensed brokers:
1. make them show proof they have a contract on the property
2, make them provide WRITTEN comps when they make market value claims
3. make them provide WRITTEN bids from licensed contractors
4. NEVER pay a non-refundable fee
5. when dealing with an unlicensed broker always try and correspond through email. This may give you some leverage to use if you have to sue one of these fringe operators for misrepresentation.

I tell people this because of all the nonsense BS I have heard from most of these guys. Met some through BP. My personal experience has been most have no idea of value or even if they do, they make totally outrageous claims as to ARV hoping to find a sucker. This was proof enough for me to avoid them.

Unlicensed brokering is a tough route and many people don't make any real money. Get funding. Do buy and holds or flips. In the long run you will make lots more money.

John Thedford · Answer

@Thoai Han

There are lots of ways. Private funding! It generally costs less. Ask everyone. Don't be shy about it. I asked a local attorney if he knew anyone and he sent me a great lender. I have another lender that is a retired policeman. He was leaving money in the bank earning nothing. He LOVES 6%..and so do I. Family can be a great source of funding. Even HML can work if you intend to flip but they may be more difficult to work with until you have a track record. There ARE ways to get around barriers so work on those. Once you get a handful of good private lenders you will be able to start doing buy and holds as well. We see some posters run out and sign contracts and then post asking for help because they cannot find someone to assign to. I think that is backwards. Find your lenders first. Find a JV partner. Find an experienced investor you may be able to help in some form. Once you KNOW you can close on a deal then you are good to go.

John Thedford · Answer

@Joshua D.

I certainly  agree. Just looked at a property where the numbers were way off. The broker failed to account for vacancy, maintenance, and CapEx. I won't deal with those types of people either. Saw an ad on CL yesterday. Unlicensed broker who has posted here on BP. Sounds like they are getting desperate. These are people we all want to avoid. Their asking price is going down and claim of value is going up:)

Joshua D. · Answer

@John Thedford

Why limit this great list of screening to unlicensed brokers only?

I have had licensed brokers give me "costs" to repair a house and those can be crazy off.  Just because they passed a sales test dose not mean you should trust their guess on repairs to a foundation.

Same with ARV.  They can make a guess at an ARV but still be way off not knowing the area that you are buying in.  Some sales people will say things just to make a sale. I would caution new people to not wholeheartedly trust someone just because they have a license.

I realize number 1 is usually clear when dealing with the MLS but the rest of them could and should be applied to those selling real estate with a license as well.

Again great list!

Thoai Han · Answer

@John Thedford Thanks for the details John. Yes I want to start out wholesaling but I need to know everything about the property and that particular market. I do not want to be one of the other guys getting a property in contract and just hoping that it sells. It seems like it'll be wasting a lot of time for the seller and they're already in enough problems. Do you have any ideas on how to get funding? I assume finding a great deal and showing the HML the comps in that area is a good start but I'm not too sure.

Patrice Boenzi · Answer

What @Ruth Bayang said, but you need to try to find properties in the same school district. Remember markets change quickly so things need to be evaluated frequently.

Ruth Bayang · Answer

ARV is determined through nearby (the closer the better) homes sold of similar style, age and square footage. It's not an exact science. But as investors, it gives you a good idea of what it will sell for should you plan to flip it. A good, investor-friendly real estate agent can help you. You should also get familiar with the neighborhoods and areas where you want to invest so you have a general idea of what homes are worth.

After Repair Value Evaluation?

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