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Don't Guess...Know - Hard Money Bankers
There is a very fine line between knowing and guessing. It sounds like it should be clear, but the problem is once we add our emotions into the equation, we can sometimes blind ourselves. In real estate investing, I frequently see people that claim the ARV of a property is much higher than it really is. The ARV is the 'After Repair Value' or the renovated resale price of a property. I don't believe that people are intentionally giving the wrong number. The wrong ARV comes from one of two places. One option is that they simply do not know how to determine the ARV of a property. The other option is that they are actually guessing at the value because they become attached to the possibility of making a lot of money and they want to do the deal. This line is very grey and hard to see for most people. People's greed emotion kicks in and the property that is worth $200,000 is now believed to be $250,000. They take a rough idea as to the value in the area and select the highest price scenario as the potential end value. They want to believe that they will be able to get a number because they want that number. They are not taking a truly unbiased look at the properties end value. This tendency can become quite risky to act on as it can cost people a lot of money. Be sure to know how to determine your ARV and the apply this skill to figure out the value of the property in a logical and non emotional way.
Ian Walsh215.839.3271
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