How to determine ARV (after repair value)

6 Replies

I am interested in knowing how to determine ARV. I don't seem to do a good job at it. I know there is Zillow, but the zestimate seems to come in too high. Also there seems to be foreclosure sales bringing the price down. If anyone could help that would be great

Nothing is a substitute for MLS access. You need it. Get licensed, or hook up with a very very friendly agent who will make you an assistant or otherwise get you access to the MLS.

I look at all comps individually to determine which are the most like what I plan to bring the house up to, then average those.

Originally posted by @James M. :

I am interested in knowing how to determine ARV. I don't seem to do a good job at it. I know there is Zillow, but the zestimate seems to come in too high. Also there seems to be foreclosure sales bringing the price down. If anyone could help that would be great

Go to realtor.com and punch in the zip code or full address of the subject property, choose sold, then use the drop down box and selected latest sold. This way you get the best ARV of the most recent sold properties in that area.

Kudos,

Mary

Hello Mary, i'am having trouble finding the sold button , where's it located ?

ARV:

1: recently sold house prices, comparables

Not list price, but sold price. Also be careful there are some sold prices that are artificial. Remove those outliners.

2: condition of the houses sold

Original condition or remodeled, adjust as necessary

3: recent market trend

Going up or down? Check current listed prices for comparables. Check out open houses.

It is not a science, but an art.

The most important thing in ARV is the location of the house. When you use the comparable sold data, make sure you know their surrounding area. If not, drive around those houses to check out potential environmental factors: railroad, wires, slope, noise, neighborhood. Etc.

Put yourself in the buyer's shoe, and use common senses.

Some error in ARV estimate is common and unavoidable. Stay on the ballpark range. Be conservative.

James,

When you are wanting to determine what a home is worth after it is repaired, you must compare that "subject property" to homes that are similar in terms of characteristics but that are fully remodeled.

Before we get into the comparison factors I think its important to note that all neighborhoods are unique in two respects.

#1 The Market Mix - The original builders could have varying floor plans, varying square footage's and varying stories however the overall neighborhood could also have varying home types such as Single Family Detached, Townhomes or some Multi-Family homes.

#2 Randomness - We can not control what neighborhoods homeowners/investors have decided to completely repair/renovate which means that all neighborhoods will have drastically varying degrees of condition especially as these neighborhoods get "older".

With that said here are the characteristics and data points you must "compare" in order properly analyze the ARV of a property.

In no particular order:

#1 Condition

#2 Bed

#3 Bath

#4 SqFt

#5 Lot SqFt

#6 Age/Year Built

#7 Relative Distance

#8 Relative Sold Date

#9 Property Type

#10 Stories

#11 Location - Near busy street/main road, power lines, canal, industrial buildings

So basically just find 3 properties that closely match your property that have already been "fixed up". Get the average of those 3 property and viola' - YOU HAVE THE "AFTER REPAIR VALUE".

I hope that helps.

* Tips 

- Don't let the age fool you of the "comps" some have been rehabbed.

- Try finding the "highest solds" first and checking their condition... Usually those are the fully fixed up houses.

- Try not to use Listings or Pending if you can... And if a Realtor sends you a jumbled mess of spreadsheets check to make sure they are "SOLDS" only as I have found that many Realtors are not very good at finding the Current Market Value let alone the After Repair Value.

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