When you're looking to purchase a REO property, how/who do you use, to get an accurate ARV for the property?
Will your Real Estate Agent be able to give you this value, or will you have to hire an Appraiser to get an accurate ARV ?
Are you looking for a rental or flip property? It takes a lot more time and effort to properly comp a flip property than a rental property. One of the most important skills you can learn is accurately valuing properties both on an as-is and after repaired basis. You can work with experienced real estate agents that are currently selling properties in your farm area. You can also work with experienced appraisers who understand and know the area. However you need to spend time learning how to properly comp a property on an as-is and after repair value basis. There are a lot of threads and books on this topic. It's extremely important to understand each block, street or subdivision. You need to evaluate what are the lowest sold comps in the area over the past 6-12 months. Evaluate each sold comp and compare it to the prospect property. Carefully look at days on market. You can adjust up or down as necessary. When looking at the ARV you need to look for solid sold comps that are similar to your property (on an after repair basis). Look at the days on market, condition of the property, where the property sits, etc etc. Look at as many sold comps as possible. Also look at the pending and active comps to look at your competition. How long have the comparable houses been sitting on the market? If there is a house at 150k active which will be similar to your prospect property after renovation then evaluate why it hasn't sold. Has it been on the market for longer than 90 days? If it has then it is probably over priced. Drive the comparable properties to get a feel for the differences compared to your prospect property. Where is the neighborhood trending? You can look at comps over the last 24 months to give you an idea what is happening in the neighborhood. Next you need to calculate your rehab costs (soft and hard). This is also an extremely important skill to learn. However if you are not experienced in rehabbing properties you can always work with experienced inspectors and contractors. Make sure to work with investor friendly, licensed and insured contractors. From there you can put together your pro-forma with financing, holding costs, etc etc.
I do it myself. I am a combo investor/Realtor, and I advise everyone to become a Realtor if they will be doing MLS deals.
If you have a good agent they can give you a decent estimate. But the easiest way is to use zillow/realtor.com, and carefully comp the properties yourself. Try to stay within 200 sq ft and use listings sold within 6 months. Similar style homes, similar area/school district, and similar quality. Make a spreadsheet with the comps and when you come out with decent averages, use the most conservative number you have. if you think its worth 150-175, use the 150 number. get it for a good price. you make money when you buy if you are flipping.
Hey @Michael Dunn , a good real estate agent can properly analyze the comps and estimate an accurate ARV. Use caution doing this yourself. It is not just an exercise of averaging the recent sold properties. Proper comp method requires adjusting for things like garages, basements, square feet, etc. You want to get this correct so your deal analysis works out. Good luck.
and really depends on the class of property.. if your buying in a predominantly rental area its hard if not impossible to establish a true ARV.. If you are buying in ESTABLISHED and KNOWN owner occupied and are doing RETAIL flips then you can get a pretty good handle on ARV through all the methods mentioned above.
However if your trying to comp low end cheapie houses that are rentals.. then they are only worth what basically a wholesaler will pay for them.. regardless of comps. I learned this the hard way myself.
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