Calculating ARV for Duplex

[Joseph Davidson]

I am trying to calculate the ARV for a duplex on a lead. A zestimate off Zillow is valued at 28k. The size of the property is 848 sqft. I have had some help with calculating this with a few other wholesalers and they both gave me a number around 43k-50k for an offer. I am curious as how they came to calculate this high an offer with the surrounding properties. The sizes and prices of the surrounding properties vary. The duplex is split into 1bed1bath on each side with their own kitchens. Any help I can get with this?

[Isi Nau]

Hey @Joseph Davidson

Zestimates in general aren't very helpful. They are often inaccurate. Besides being inaccurate, they won't help with ARV because they only provide current value, not future value. Although, there is Zestimate Forecast, used to predict future home prices. But if regular Zestimates are inaccurate, I can only imagine that placing Zestimates into the future only exacerbates the flaw!

I would take a wholesaler's estimate with a grain of salt.

You'll want to determine your ARV by looking at recent sales in the neighborhood. The more identical the sold properties are to the subject property, the better. This is where emotion often gets the best of an investor. They think their subject property is way better than the recently sold properties, which leads to an overinflated ARV. This will lead to problems when they sell or refinance. Correctly calculating ARV is one of the most critical steps during due diligence.