Primer - Estimating ARV

[J Scott]

I've seen a couple threads over the past week where the OP has questioned how to find comps and estimate ARV. Marty Boardman and I discussed this topic a bit at the BP Summit last month, and I also put together a quick primer that I distributed to those who attended our Summit presentation.

This 10-page document certainly isn't an "everything you need to know about doing appraisals and estimating resale value," but should be enough to teach anyone the basics of estimating ARV.

Let me know what you think...

http://www.biggerpockets.com/files/user/JasonScott/file/estimating-arv

[James Vermillion]

Louise Whidby, no worries. Maybe I can explain better. Lets look at two properties.

Property A (subject property): 10 years old, 1700 sq ft, 3 bedrooms, 2 baths (lets just look at those items to keep it simple).

Proberty B (the comp): 5 years old, 1500 sq ft, 3 bedrooms, 2 baths

We determine the following adjustments need to be made:

Age: -7,000
Sq ft: +5,000
Bedrooms: none
Bathrooms: none

If the comp sold for $150,000 we would subtract 7,000 because the subject property is older and add 5,000 because the subject property is larger, leaving us with a total adjustment of -2,000.

Based on this very limited example, the subject property would have an ARV of $148,000.

Does that help at all?