What do I do if I cannot find any comps to calculate my ARV

Question

I’m still fairly new to wholesaling and I keep coming to the same road block when trying to calculate some deals. I often run into the problem of not finding any comparable for my deal.

Does this mean that it is not a good deal and I shouldn’t do it, or is there a way around it?

Erin Johnson · Answer

I'm not too familiar with the wholesaling world, but there are multiple avenues for comparative analysis.  Appraisers use a combination of 3 methods to arrive at a value,  sales comparison approach, cost approach and income capitalization approach.

Sales comparison is the most common for residential. Cost is used for structures that are unique and more difficult to find comparisons so the value is determined by calculating the cost the rebuild. The income approach uses the income generated from the property to calculate value.

You might have to widen your parameters to dial in some comps.  Do you have anyone local that knows your market you can consult?

Joseph Cacciapaglia · Answer

What type of properties are you looking at? It seems very unlikely that you're finding properties that don't have comps. I had to appraise an extremely large cash handling facility that was essentially a giant vault at one point in my short appraisal career. It was the only property that I truly wasn't able to find 3 comps for (I found 2 though). That was a situation where the cost approach was the right move, as @Erin Johnson described. However, any single family or small multifamily property should have comps. You might need to expand your geographic area, or do a number of adjustments to the comps, but they should be out there. It may be helpful to find an agent to show you comps for some properties in your market. This might make it more clear what can and can't be used for a comp.