Determining ARV

[Marcel Pean]

Hi BP,

I have a very specific question so I'll try to keep it simple.

There is a seller that wants to sell their house "yesterday." It is currently on the market for $750k after a $50k price reduction. It is being sold in AS-IS condition. I went to visit the house with the seller and it needs mostly cosmetic upgrades, a new layout in the common spaces and probably a new floor (finish floor not floor structure). I estimated this ARV to between $900-$950k based on the average sales price of similar homes in the area in the last 6 months. I want to make an offer between $500-$550k for it.

The house next door, which is a similar style, has 1 less bedroom, 1 less bathroom and no pool, sold a few months ago for $705k. It was also in AS-IS condition and was listed on the MLS.

Should I raise my offer price to match what the house next door sold for or stick to the $500-$550k range? The goal is to wholesale this property and for me to buy it at $700-$750 would mean an ARV of $1M. There is a house in the neighborhood a few blocks away that is on sale right now for $899k and it is slightly bigger and updated. To my inexperienced mind, $1M ARV seems a bit high.

Thanks in advance for any feedback.

-M