How am I supposed to get ARV.... if??

Question

The comps are all over the place? Every property I search have inconsistent comps that are super high or really low. Most of the recent sold comps are in the millions. Some are in the high $100 thousand dollar price range. Others are way below that.

Wayne Brooks · Answer

You can’t determine comps just by distance (just across a main road can be triple)....you need to stay in the same neighborhood/subdivision.

Ned Carey · Answer

@Tony Marcelle

Yes that is a great idea.

Tony Marcelle · Answer

@Ned Carey I have never used an appraisal before, so I assumed it would be ok to ask an appraiser about the adjustment procedures they use to get home values. I have a lot of properties I am interested in right now that I need to get an accurate value for each one.

Ned Carey · Answer

@Tony Marcelle Google or ask for a reference from an agent.  Why do you want an appraiser? A bank or lender will not use an appraisal you order. The lender has to order it.

Tony Marcelle · Answer

@Ned Carey Thanks for that information. Where should I look to find an appraiser?

Ned Carey · Answer

Tony, the hundred house is more of a saying than a "rule". The number may not be exactly one hundred. It may be 50 it may be 200. The point is you need to get out into the marketplace and learn the market.

What kind of  houses do you look at?

• Public auctions
• open houses
• listed properties
• wholesalers deals
• FSBO
• deals from your own marketing
• Stop at any house you see being rehabbed
• Visit other investors deals whenever you can.
• Follow up and see what properties you looked at wound up selling for

I am not talking courthouse step auctions. I am talking about public auctions where you can go inside the house before the auction. Estimate what you think it will sell for. In 10 minutes you will know what other investors thought it was worth. The winning bidder will be busy but ask the second or third place bidder how they evaluated the property and why they bid the amount they did.

If you drive by a house that is obviously being worked on stop in. You will either meet another investors or you will meet a contractor. Either can be a valuable contact. Ask about the project.

Take any opportunity you can to visit other investors deals. Ideally at various stages of completion and ask them the numbers on the project and any thing else they are willing to share.

Yes I  mean go out and physically visit properties. Picture can be valuable but they can also miss a lot.

You need to know the level of finishes the home buyer or tenant expects. You won't get that completely from just pictures.

No you don't Absolutely need to go visit comps. Since they are sold you won't be able to get in. However driving the neighborhood can help.

An appraiser will adjust for differences between the "Comparable" properties and the subject house. If a comparable house has 200 less sq ft he is going to add a little to the value of the bigger subject house and vice versa. How much to do you add for a finished basement or more sq ft.? That is the magic question that takes experience.

A great expert tip from J Scott is get a few appraisals and look how much the appraisers chose to adjust for various features

Tony Marcelle · Answer

I always stay within 6 months. I am not experienced with adjustments. What exactly am I adding and subtracting if you don't mind?

John Thedford · Answer

Comps are just that---comparable. Square footage, age, pools, construction, views, neighborhood (such as gated) , etc. You can go out a mile if needed. Also sales should be within the past 6 months. A house with waterfront isn't going to be the same if yours doesn't have that. Once you find comparable properties then you adjust for differences.

CBS--if the comp is better--subtract.CIA-if the comp is inferior--add.

You make your adjustments to the comps-not the subject property.

Tony Marcelle · Answer

Let's say I do a search and find 10 or more comparables. I narrowed it down to houses that are as close as it can get to being a match based on bedroom, bathroom, square footage, and year built. Once I narrow it down, I only find one out of all the comps as being a close match. The year built and square footage may be slightly more but it is the closest of all the other comps. That is main issue I have when I do a search for comparables.

Wayne Brooks · Answer

Distance is Not the sole factor, as mentioned.  Yes, it would be a good idea to look at the area, you’ll see why the difference in the “comps”.

Using distance only, is like using just the weight of watches to determine value.

How am I supposed to get ARV.... if??

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