Methods to determining ARV

[William Graves]

Hey everyone!

I’m currently reading The Book on Estimating Rehab Costs, and it’s been a great read so far!

I'm trying to learn the process, and my next step is learning good ways to estimate the after rehab value or ARV.

My question for you guys is, what methods do you guys use to gather an ARV estimate for your potential properties?

Thanks in advance, I really appreciate it!!

[Kenneth Garrett]

@William Graves

The ARV is based on comps. If you do not have a broker who can run comps then you can use Zillow and Redfin. Look at recent sales within 1/2 mile of the property you are analyzing. Keep increasing the distance until you find a comp. the further you go out the less accurate the comp is. 1 mile is reasonable, but I prefer 1/2 if possible.

You need comparable as close to yours.  Same style home, age of home, bedrooms, baths, crawl or basement (finished and/or unfinished), garage  updated improvements (kitchens/baths) etc.  Look at solds only.  Things currently on the market are perspective sales only.  They are not factual unit sold. Finding an exact match is ideal.  Same model as yours.  Look at the improvements; have  they been updated or is it 1980’s decor.  I like to use actual comps and break them down into dollar per square foot.  Then I take an average from my comps and also look at the high and low comparison.  

It is important to be honest on the comps.  It’s only math.  If I find a similar comp, I will improve it one step above so I know at least that is my true number.  This does take some time.  It’s important to stay in the same school district, be careful if you cross major streets it can put you in a different school district or neighborhood or even city especially when you are in the suburbs.

Even when you have a broker you must analyze the comps to make sure they are in the same area and same style home, beds, baths, etc.

Good Luck.