How to Use Comps Effectively to Determine ARV

[Shafi Noss]

Hi everyone,

There are a few posts on BP asking "How do I figure out the ARV?" and each time knowledgeable people answer, 'look at comps' or 'ask an appraiser'. Let's focus on comps. No two houses are the same, and this makes comping an art rather than a science. But art can be done well, and it can be done poorly. How can someone do the art of comping well?

For example, if you just renovated a house, would it sell for above market value since its recent polishing puts it in better condition than most other houses? How do you determine (approximately) how much something like an extra bedroom or bathroom is worth, or extra square footage or a larger lawn? Is there anything that may not seem obvious, but is actually great to know about? How do you use comps to effectively determine ARV?