How to Estimate the ARV

Question

Hello All!

Firstly I want to say thank you for taking the time to read this and offer your advice.

I am currently doing a calculation for a property in my parent's neighborhood. The house is listed for $150000 but the listing agent has made it known that the sellers are highly motivated to sell. I am looking to offer significantly lower knowing that it will need to be taken down to the studs.

The obstacle I find myself facing is there aren't any properties in the vicinity that have been completely renovated and sold/currently being sold within the last 90-120days. In light of this, what do I do to get an ARV calculation to know if this project will be a deal or not?

Michael Ealy · Answer

@Dorian White, if there are no comps sold in the past 90-120 days, I will be wary of even buying a property in that area. If no one is buying, how can you sell?

Having said that, how are you doing your comparable analysis? Quarter of a mile radius, sold in the past 3-4 months? If you can't find any sold, then go half mile or even 1 mile (if it's a rural area) sold in the past 6-9 months.

If you still can't find one, what about new construction? New construction will of course be higher than the price of renovated homes so at least it gives you some idea of an upper price (maybe deduct 20-30%).

Lastly, you can find the replacement cost of similar properties as the last way to calculate what a single family house is worth.

Daniel Brown · Answer

When trying to find an arv, make sure you compare apples to apples. Sq footage give or take a 100. Style of house and year it was built. Have your realtor run a CMA on it if you cant find anything. I see you're also looking to refiance this property. So I'm assuming you're brrrring it? If you have any questions on numbers just shoot me a DM and I can help ya out. Good luck!

Dorian White · Answer

@Michael Ealy Thank you so much. I was looking for the comps more so for refinancing. I will expand the net and see what I can find!