FSBO vs ARV

Matthew J. T. · 2011-06-02T19:05:30-07:00

I've been searching countlessly to find an answer for this, my question is that, well I guess two questions. First of all, if I find a seller that is putting a property up for sale for 185k for example, and the actual ARV is only 150k, how do I go about telling the seller that you are selling this property for way too much to start at ? If you follow me, you have to be able to make a deal starting at the ARV not at what the Owner is trying to sell it at correct? Or do I negotiate with the owner based off of what there "Set" price is , or do I negotiate based off of what "ARV" is? Second, I've been spending time researching how to find comps, even if you go based off of ARV and not what the seller is trying to sell the house to you at, and all the websites (which I have seen other people on here as well on BP) often have inaccurate information such as zillow etc (the free/computerized websites) And so if I don't have access to MLS or know anybody, what can I do about estimating ARV of a house? I know there are "pay" websites such as RealQuest and SiteX but I am just starting out as of now and they seem to be expensive and I have searched just about everywhere looking for my answer so hopefully I can find it here. Starting out what is the first method you used without having MLS getting a contractor or paying expensive websites to figure out ARV?

Bill Gulley

Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes

15y

Matt, my first question would be - are these properties local to you? If so, get off the appraisal sites, none IMO are accurate. Use the MLS with a Realtor, especially at first.

Pull your comps first, you don't know what it is worth until you assess the value. Then when dealing with a FSBO, show the comps and justify your offer. Explain what the market is at that time.

FSBOs usually need alot of caoxing and explanation if they are not highly motivated to sell. Usually, they are trying to do it themselves to save money and usually out of touch with the reality of the market. So, you have to educate them.

I have seen FSBO sellers justify their price by saying what they need, topay the house off and a car and the daughter's education. You have to inform them the house did not buy the car or send that young lady to school! IMO, unless you have a motivated seller, stay with properties listed properties as a beginner. (I'm sure many would disagree, but you can spin your wheels with FSBOs. Good luck

2 Reply

Rob Gillespie

Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes

15y

Hi Matt,
I would not spend a ton of time on this one. There are way too many good deals out there to spin your wheels. As far as finding comps, you need to make friends with a local Realtor. They can pull comps using MLS. Just call one of the active agents in the neighborhood and ask them if you were to buy that home, how much could they list and sell it for.
The biggest issue is, you not only gotta make the seller aware he is overpriced, you gotta convince him to go at least 30% below market, and then take repairs off of that.
Finally, the seller just may owe that much. You may be able to short sell it, or offer him that price with great terms to make some money. Good luck! :mrgreen:

1 Reply

Jeff Crum

Real Estate Investor · Jersey City, Select a State · Member since 2011 · 16 posts · 2 votes

15y

Matt,

I tend to agree with the previous posts. If you are unsure about ARV in your current market, it is best to consult a local realtor on the matter. They might even provide light as to what to look for in future endeavors.

For the seller/potential seller with ARV denial issues, I would also say not to get too frustrated by this situation. There are a lot of good deals out there, you just need to find them. If this seller is overestimating ARV and the pricing is not favorable in your point of view, it is likely that other potential investors see things your way. Eventually, the owner will have to realize what the market is saying about their predictions, and thus, will reevaluate their ARV prediction and change the seller's price, assuming a motivation to sell is present. Even if you like the property, patience in this instance may be the best play.

In terms of negotiation, it depends. It is best to negotiate off of ARV assuming the numbers are accurate or accurate enough. But if you aren't confident in the number, you could go seller's price, but personally, I wouldn't engage in negotiations at all. If they base a price off of an ARV gained from a non-reliable source, negotiation will revolve around that faulty finding, and you might end up losing out. In investing, if there's doubt, bail out.

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Matthew J. T.

OP

Real Estate Investor · Albuquerque, NM · Member since 2011 · 156 posts · 20 votes

15y

Thanks everybody for your help, I have been searching around and I think I found what I am looking for as far as getting reliable comps in my local area. All I did was get on google and search MLS in my area, which is Albuquerque, it directed me to this website:

http://www.realestateinabq.com/all_albuquerque_properties.html

From there I clicked "How much did that house sell for?" And it redirected me to a link, I put my name and contact info, click continue, i added zip code, sq ft, number of bed and baths, and from there it submitted me and e-mail saying they will let me know when they have found recent comps based on what I searched... Hopefully this is all I need...

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