Real Estate Investor · Highland, NY · Member since 2009 · 58 posts · 0 votes
Not sure if this is the right place for this post.If not,moderators please move it to the proper forum.Ok I have a HML that only lends on the As Is value of the property,they don`t use the ARV.So my question is How do I determine the As Is value before repairs? Thanks
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
16y
Hi, basically values are found through subjective abd objective analysis based on other properties similar to the subject property. Adjustments are made to the comparable properties to make them equal to the subject property. The costs required to repair the subject are assessed and viewed to reduce adjustments. If repairs are significant other factors may be considered such as marketing time and carrying costs, inspection fees, financing expenses required for improvements and of course materials and labor. Generally, these factors are subjective, based on experience of assessing repairs in the area. The as "is value" is a value that is expected to be received in the market in it's current state and will probably be lower since that markey will be limited. Most homebuyers in the marketplace do not consider a home in need of significant repairs, the more repairs required, the lower the expected value. Consideration must be given to the limitations in that market due to the entrepreneurship, time, labor, materials and financing costs to a potential buyer. In other words, who would want to buy it? IMO, Bill