# Comps and calculating ARV

3 Replies

Howdy,

I've come across a 3/2.5 condo with 1803 sq ft. It is located in a complex where only 1 other unit has sold recently, but this unit is a 2/2 with 1178 sq ft. It sold for \$135,000 about 5 months ago with a \$/sq ft of \$118.76. Both of these condos were built in the same year.

I don't have access to the MLS, but I did get this information from Listingbook.

What is the best way for me to calculate the ARV in a situation like this?

Do I just multiply 1803sq ft by \$118.76 and call it good? I've heard that the price per square foot goes down as square footage goes up.

I'm seriously confused here, and would greatly appreciate some clarification.

Thanks!

Do I just multiply 1803sq ft by \$118.76 and call it good?

Sorry, nope. Best if you can find closer comps in other nearby and similar building. If an appraiser was forced to work with this comp they would use an adjustment factor. Using your \$118/sq.ft. number they might come up with a factor of \$60/sq.ft. Then they take the difference (1803 - 1178 = 625) and multiple that by the adjustment. That gives \$37,500. So they might add this to the sold price for the comp to get a value of \$172,500. That's just my guess at an adjustment factor, but it will not be the \$/sq.ft. of the comp.

They would look at other factors, too, such as condition, view, etc. Whatever matters in your area.

But you must have more than one comp. An appraiser would go further and further away to find more comps.

If a property is hard to comp it increases your risk on the deal. I've been there and took a beating to the tune of a \$40K difference on a hard to comp property. Ideally you want deals with there are plenty of very similar comps. That gives a good idea of which ones the appraiser will choose. If comps are hard to find you have no idea what an apraiser might find.

Do not use price per square foot to calculate ARV. Look for similar comps in the neighborhood, they don't have to be in the same complex. The problem with price per square foot is that it does take in to consideration number of bed/bath, upgrades, etc. Get good comps, that's really the only way. If there are absolutely no comps then talk to a realtor and have them helpbyou with the ARV.

Thanks for the help. I'll expand my search radius and see what I can find.