No comparable, what to do?

[Brandi J.]

Hey BP fam. How should we determine ARV on a property that's in a nice area of Macon, GA with no similar comps nearby? The house we have under contract is 5 bedrooms/3.5 baths with 3 levels, on a 17,000 sq ft lot. However it needs a bit of work, but once renovated it's going to be the crown jewel in the neighborhood. We went back 12 months and about 1.5 miles out for similar renovated comps and found nothing.

How should we determine the ARV of this unique home?

Is it possible that this house can create a higher/different comp for the area?

[Jason C.]

@Brandi J. 

Good morning Brandi,

From my research, Macon’s ranging average is about $77-$83/square foot. That’s helped me in my recent purchases to give a ball park idea but if you’re going to rehab the house to above average, you probably can go higher. Also, i usually check the Bibb tax assessors website for current and past assessed values at: http://www.co.bibb.ga.us/TaxAs...

Click on "Search Records" then "Property Record Cards" and plug in the address and you'll get some valuable information. I also check MLS daily so I might know which house you're referring to, if you want to PM me the address I could ask my realtor if she can help with comps. Thanks and good luck!!

[Jeff Kao]

Hi @Brandi J.,  Did you try getting help from a local realtor to find comps? A local appraiser may also be able to help you. 

[Brandi J.]

@Jeff Kao yes we spoke with a realtor today. She said the house is in a weird area. There are big nice homes for two streets, then a couple of streets down the homes are smaller and not renovated. She did not give any comps.

[Allan Smith]

What's the main limiting factor for comps? Are there just no other houses this big? Other than a gut instinct from experience that a flipper who has done a lot of deals would have, there might be a few workarounds. For example if I am buying a larger house in a smaller neighborhood, I will use one of the more expensive sales in the neighborhood in ad on 15K or so as a bare minimum comp. That extra 15K brings a lot of square footage, so I don't worry about it appraising. At the end of the day, if there are no comps, it is just a more risky deal overall. Often times you can be very well rewarded for this but that is the risk you take.

[Jason C.]

@Brandi J. 

Good morning Brandi,

From my research, Macon’s ranging average is about $77-$83/square foot. That’s helped me in my recent purchases to give a ball park idea but if you’re going to rehab the house to above average, you probably can go higher. Also, i usually check the Bibb tax assessors website for current and past assessed values at: http://www.co.bibb.ga.us/TaxAs...

Click on "Search Records" then "Property Record Cards" and plug in the address and you'll get some valuable information. I also check MLS daily so I might know which house you're referring to, if you want to PM me the address I could ask my realtor if she can help with comps. Thanks and good luck!!

[Wes Johnson]

i rely on my comps without question. if there are no comps, it's awfully hard to determine what it'll be worth. As much as you may feel in your heart its a good deal, lord knows I've been there, you can't take the chance on trying to set the market. If you were my client i would not advise you to do it. But i've also seen investors do some of those kinds of deals in spite of my advise and done well. I've also seen ones that didn't go so well. Be careful with this one. Keep in mind there will always be another deal. I promise you. If you're well connected and have a good team, you should be getting at least 1 deal per week you could say "yes'' to. 

[Eric M.]

In the end it is just an educated guess.

Go back more than 12 months until you find a couple of comps. Let's say you fins a couple at 30 months. Then look at other areas nearby with good comps across the range of time and see the difference between the 30 month old comps and the current comps.

Then apply that change to your 30 month comp. And cross your fingers.

But yes, absolutely if you have a special house that is the crown jewel, you SHOULD be setting record comps. If you are building a crown jewel and not setting record comps, you may have an issue. Either the market sucks that bad right now, you aren't really the crown jewel, or the area doesn't care abut or simply can't support crown jewels.