How to find after repair value on a house?

9 Replies

Originally posted by @Aaron Duran :

I understand the formula to use which is (ARP*.70)-repairs=buy price. I just want to know the best way to get an accurate ARP

I think you're looking for an "easy button" that doesn't exist. Zillow uses a complex algorithm to determine property values...and it's wrong more often than right. You really need to study the market trends, know the community, and evaluate the home with recently sold homes for a good comparison. It can take years to really be good at it.

 

@Aaron Duran

You will need to use sold comps based on what your finished product will be.  If you update the kitchen and bathroom, install new appliances and repaint, you’ll use comps.  Don’t trust Zillow or any other easy formula as @Nathan G. mentioned.  I use Redfin mostly, but will add in Zillow and Trulia for my sold comps.  Of course, if you have a broker then can run the comps for you, but you still need to analyze the comps for good comps.  Same area, same school districts, same bedroom/baths, etc.  

Originally posted by @Aaron Duran :

@Suraj Gupta what is a CMA?

Comparative Market Analysis. Comparing your property to recently sold properties of comparable size, location, condition, amenities, etc., in order to determine market value.

 

@Aaron Duran and @Suraj Gupta A CMA (Comparative Market Analysis) is also known as the fair market value (AKA ARV After Repair Value) for a property. The CMA is also known as "Comps" for a property. But more specifically sold comps for a specific property. Only way to get this report is to work with a Realtor. Realtors use the most common methodology to assess value for a property that appraisers use. The appraisers are sent out when a property is under contract with financing and lender sends the appraiser to "assess" value of the property. @Kenneth Garrett is correct about be wary of third party sites assessment of values. Especially in non-disclosure state to include here in Texas. In short, a non-disclosure state the sales data for real estate is not disclosed to the public. So only way you can get accurate "comps" in a non-disclosure state is working with a Realtor. Also, I recommend working with a Realtor that is a fellow investor. Because they can also run a CMA for rents on a given property if your exit strategy is buy and hold (rental). Also, they can help give you an idea of what the repairs will be on a property that is in need of repairs before submitting offers. 

@Aaron Duran Basically a CMA is a worksheet which compares subject property to similar properties. It can be compared on the basis of No. of bed rooms, bath rooms, Sq. footage, etc... Most of the comparables used are either recently sold properties or active properties. Process is not so complicated but I may not be able to explain it without going through an example. The realtor will go through this process and come out with a range within which the subject property can be sold after the repairs. So, essentially ARV. Now, how you get the repair value is by contacting a reputable General Contractor who is local to the area as the subject property. He can look at the work required and quote for the same. Realtor can again help with that as they usually know someone. As a realtor, I also use the guide (check link below) as a reference point to help find the ARV (thanks to Pillar to Post).

https://pillartopost.com/wp-co...

Hope this helps!

-Sg

All should be very aware that if the ARV you want is for lending purposes you should speak with a local appraiser, not realtor. ARV for flips can be derived from a realtor's CMA with less risk.