ARV number

[joseph44]

Hi Everyone,
Question on a rehab how do you old timers reach you ARV price what formula
do you use.I'm not new to investing but new in this game.I tried 1 home
all was going well till the appraiser came in $20,000 short of my target number
I used a H/ m/ l for the project so the deal never materialized with my contin.
clause I decided to walk.Now I'm ready to do this again but this time I don't
want a realtor to help me with the numbers.I'l use the same hml but this time
I want to know haw to reach my ARV figure.I would appreciate any and all
advice on this matter.Hope this isn't toooo long have a great wk/nd!!!

[Dan Auito]

Joe by knowing your farm area very well you can often get a good number off the top of your head but hey not everyone stays in their farm so appraisers are by far your best ally in the fight to discern value.

Also the realtor with the most signs in the neighborhood of interest is also well informed as to what things are going for there too.

Now you need to inspect a house carefully making the punch list of things that will need fixing and then either get quotes from reputable contractors or prices from homedepot, Lowes etc... and consider your own efforts at labor.

Add, closing costs, sales costs, carrying costs, taxes, insurance, Marketing, signage, newspaper ads, gas, printing flyers etc...

Add everything up subtract those costs from the suspected eventual sales price and see what you could reasonably expect as a result.

I wouldn't do anything unless it's atleast 30% off market value in order to be secure in the fact that I'll come out ahead in the end for all those efforts.

[brianb_cobbres]

Hi Everyone,
Question on a rehab how do you old timers reach you ARV price what formula
do you use.I'm not new to investing but new in this game.I tried 1 home
all was going well till the appraiser came in $20,000 short of my target number
I used a H/ m/ l for the project so the deal never materialized with my contin.
clause I decided to walk.Now I'm ready to do this again but this time I don't
want a realtor to help me with the numbers.I'l use the same hml but this time
I want to know haw to reach my ARV figure.I would appreciate any and all
advice on this matter.Hope this isn't toooo long have a great wk/nd!!!


How did you determine your target number? Was this listed through a realtor? Did you use the listing realtor or have one of your own?


Here is how I determine ARV.

I pull up all sold, under contract, and for sale in the same subdivision. He very careful here are your comps can go all screwy if you use a radius from the house as you could be next door to a much more expensive neighborhood.

Clean up the comps to only those that are true comparables as far as size and resale condition. That alone should give you a good idea of what the house is worth. From there you have to get into comparing square feet and condition to come up with an appraisal number but you may not need to go that far.

The sold and under contract will tell you how much people are willing to pay to get into that neighborhood and the active listing will show you how much competition you will have. Your ARV needs to be more than just a comparision, it needs to be what you realistically can sell the house for in the current market conditions.

For example I was researching a house the other night. They are asking 94k and the top sale in the neighborhood was 160k. The problem is there are 4 active listing in the same neighborhood all around the same size and 2 were rehabs yet they were all listed under 140k. Can I really use 160k as my ARV? Probably not even though it may appraise at that price. My safe bet is to set my ARV as to compete with the other houses to ensure a quick sale. In this case I started my calculations right at 140k and worked down from there.

In another example the comps show a house being worth 280-300k based on my math and based on the comparison program in realist. I ran it past my realtor and she came back with suggested listing price of 235k. I see what she did by including some other foreclosures, I dont agree with her, but then again I cannot afford to be wrong. She agreed the numbers show 280ish but really did not expect I could sell it for that much given the neighborhood and the style of the house. I have since gone back and have to agree that even fixed up this house really only compares in size but not appearance. Lesson learned.

Comps and ARV are very subjective.

[Randy (SELA)]

I'm not an old timer, but I don't think there is a formula. It's all up to the appraiser. When financing thru a bank, the only ARV that counts is the one the appraiser gives them. When buying to rehab, look at sold comps to get an idea how much the house will sell for when it's finished.

[steve-homefree]

Know your market area.(make it small)

If your strategy is to flip the house,try to get the buyer to use YOUR broker for purchase money.
Use your broker's appraiser for your ARV opinions.

My broker uses one or two appraisers that I can call for comps when considering a purchase.

[joseph44]

Goodmorning All,
I want to thank all of you for your responces they were great and very informative I will I won't make the same mistake again thanks to all of you.Have a great wk/nd!!