Setting ARV based on comps vs. market demand?

[Sarah Lorenz]

Having a little "discussion" with my partner about setting the ARV on a flip based on the few comps available, vs. an analysis of market demand. In our area, there is high demand, very low inventory and very, very low supply of new construction or totally renovated homes. I say that we set a higher ARV based on homes in a wider area of equivalent neighborhoods that are new construction/fully updated, rather than nearby sold comps that are not equivalent in size or condition. It's the difference in the way an appraiser looks at comps vs. the way buyers shop, in my opinion. How have you made decisions on ARV?