Estimating ARV values in the Chicago area

[Account Closed]

Hi,

I'm relatively new to Real Estate, I've been reading a lot of books for the last 6 months and I just started wholesaling properties. I have two main subjects that I feel I need to improve. Estimating ARV values and Repairs.

Sometimes is hard to estimate the ARV values for certain neighborhoods in my area. Prices can fluctuate block by block. I understand the concept of using "comps". However, prices in some neighborhoods very block by block. What factors do you take into consideration when estimating ARV values in neighborhoods like these?

[Lumi Ispas]

Hi Daniel,

You need an expert to run the comps until you learn your area very well.

Zillow and Trulia can diverge by a lot from the real prices, as they don't compare apple to apple and orange to orange, meaning that they will compare single family homes with condo units and multifamily buildings sold in the same time, within a block. In Suburbs, if the homes nearby are very similar, the price can come up very close to the market value.  In Chicago, where every house is different than the next door house, the value can be off by tens of thousands.

Apple to apple means 2bed/2bath condo  is compared only with 2bed/2bath condo, similar age, sq and conditions.  Single family home 3bed/2bath compared only with similar 3bed/2bath, and if you don't have enough comps, than you have to add or substruct value from the comparables next door. Let's say if you compare a 3bed/2bath 2000sq home with a 4bed/1bath 1800sq home, you have to add value for the 4th bed, substruct value for one bath and substruct for the 200sq.

I advice you to call Realtors from your area to run these comps for you. If the homes are in a very far area, you should hire Realtor to do BPOs for you. ( Broker Price Opinion). A drive by BPO it's about $50.00, so the broker will send you a full report with pictures of the house and street, or if you do an interior BPO you can pay $80-$100, and in that case the broker will take pictures of every room, mechanicals, everything inside and outside plus will give you a detailed report including all the sales within half a mile, all the inventory, etc. 

These reports take a lot of time for the Brokers to do, however if you can't make it in the area, sometimes will be worth it to you to just get a BPO. Plus offer the commission to that broker in case you'll flip the properties. 

Hope that helps!