How do you handle an investor challenging your ARV?

Question

I'm sure everyone that has tried to dispose a deal before has had investors challenge the ARV, with things like "your ARV is way off" or "I'm not sure where you are getting these comps from"

I understand most investors will automatically lowball ARV or use different  comps than the ones I provide to justify a lower offer.

How do you handle this situation or what's the best way to comeback the pushback on the ARV?

Bruce Woodruff · Answer

The same way I would handle an Appraiser when the property is too close for comfort....

Have your Comps spreadsheet ready (with both Active and recent Solds) complete with pictures and all that. Make it into a presentation and hand it to them in a folder. I just did this and had a spreadsheet for each category along with 3 pages of pictures (each). Then a list of features that make the property unique or special. Add a cover sheet that makes it all pop. If your numbers are spot-on (and they should be), what is the buyer going to say? There is nothing they can say. Numbers are numbers.

Stephen Morales · Answer

Hi @Daniel Barba,This is a pretty common tactic used by buyers. Now sometimes they may be actually right, but half the time it's a negotiation tactic. If you have high confidence in your ARV, I would simply review the comps that you have and go over the reason why they were used to determine ARV. If they are still disagreeing I always like to ask them what comps they are looking at and then proceed to break down why they don't apply. If you have a great relationship with a broker, you can have them run quick CMAs for you to reinforce your opinion of ARV. Hope this helps! If you need help running comps you can always try out our free software at PrimeTracers. Good luck on your future deals!

Joe S. · Answer

well, quite frankly, most of the time the ARV is inflated by wholesalers.  I’m not saying that you however………

Ben Fernandez · Answer

There is no need to entertain opinions on the ARV unless you feel uncertain to begin with.

Two things make or break a deal when it comes to numbers; the ARV and the repair costs.

Although its rather odd, I've seen realtors and wholesalers use comparables they shouldn't have been using at all. Also, when you see someone with 8, 9, 10 comps...they don't know what they are doing. (Three is ideal, two will suffice and four is one extra for good measure.)

I'd lean more toward your repair costs being off then your ARV. But, that's just me speaking from where I've seen people display inaccuracies most frequently. I've had wholesalers tell me a reno was $10k and it turns out to be $60k...(I never believed $10k to begin with, but creditability must be measured and confirmed.)

If you aren't confident in your skills, anyone can talk you down. Confidence comes from knowledge and then experience (on repeat). Keep in mind some investors will outright lie about what they feel is a comp or not just to see if you know your stuff and/or to back you down.

Real estate has many manipulative tactics. So be prepared.

If its helpful, DM me and I'll send you a checklist.

Pedro González · Answer

I just use MLS data, Texas being a non-disclosure state, Propelio, redfin or Zillow don't work as source of data.

Marcus Auerbach · Answer

You can totally use Zillow for comps. The data is good (the same as MLS) and Zillow even has a comp tool you can use. The problem is that establishing ARV is both art and science. Most agents struggle with it, any training we offer is always packed. ut you don't need to be an agent to get good at ARVs, you get better with time and practice. Calculate 100 ARVs and see how close you get.. I would not argue with someone who does not have much experience.

David Mares · Answer

@Daniel Barba as long as your comps are valid you can lean on the data. May have to adjust timeframe and narrow the distance since SA can differ from pocket to pocket even major roads or other factors can make it a challenge. Hope this helps.

Daniel Barba · Answer

@Stephen Morales that was great info, thank you for that

Jill Sallis · Answer

I'm In San Antonio and as long as you are providing comps within a reasonable timeframe with same/around sq footage, bedrooms, bath, lot size, story(ies), to include pictures. Include those on market and recently closed (off market).

i'm curious as to where you're getting your information from. A lot of investors want information from a reliable source  to validate the ARV.

How do you handle an investor challenging your ARV?

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