ARV estimate disparity with RE Agent. What now?

Question

I am looking at a duplex that needs a full rehab in a midwest city.

My real estate agent sent me a list of comps, and by what I can tell from recent sales, the ARV could be about $85,000.

However, I asked her for her estimated ARV number, since this is my first deal, and she came up with $165k-170k.

Now I'm a bit stuck, because this is my first comps calculation and now I'm doubting if I did it right/wrong/too conservatively.

Any help would be greatly appreciated.

Thanks!

John Thedford · Answer

it they are using foreclosures and/or distressed sales, those are not considered by an appraiser, AND SHOULD NOT be used by an agent. Those numbers are NOT the norm. There is definite reason to question her figure. If it needs work, get a licensed contract bid (OR TWO).

David Hald · Answer

Thanks everyone for the replies. In general, I am looking at the lower end of renovated/non-distressed properties and shooting conservatively.

@john thedford

You said get a bid from a GC. I wasn't aware that they also can estimate after repair values of renovated houses. Is that what you meant? Or simply get a GC to make an estimate of the total renovations cost?

Thanks again for your helpful replies, all!

Jay Helms · Answer

@David Hald - thinking down the road (whether you plan to flip or cash out refinance), banks are going to loan on recent comps and in my experience/market, they are starting to be very conservative on small multi.

Michael Noto · Answer

@David Hald The agent is probably giving their ARV based on non-foreclosure and short sale comps. Does your comp info include foreclosures? If so, that could be where the disparity lies.

Mike H. · Answer

Could it be that her ARV is for both sides of a duplex and yours is for just one side of a duplex?

I have to think there's a miscommunication going on with something of that sort to be that far off.

Grant Rothenburger · Answer

As everyone else said, that is a huge difference. I would ask her how she cam up with that number.

Brian Pulaski · Answer

She sent over a CMA which showed a bunch of sales and it looks like $85k is about where they average out/land? She then said the ARV is $165-170k? I would ask her how she gets that ARV out of $85k? Seems off to me as well, but it sounds more like she did something wrong or needs to explain her valuations better.

Russell Brazil · Answer

Well that is a huge difference...like 100% difference in value.  What are your justifications for ARV and what are her justifications for a value 100% higher?

ARV estimate disparity with RE Agent. What now?

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