Ok so I found 3 vacant houses not even a mile away from my house today. 2 were vacant and no sign out front. 1 vacant house had a FSBO sign with a price on it. So I looked online and found 2 owners name and numbers, but cant find one.
I then tried to determine the ARV from Zillow, Eppraisal, Appraisal District and Cyber Homes. I know Zillow is not a good source, but I wanted information on the house and to see what they thought it was worth.
One of the houses that I am stuck on is this one:
Zillow- $127k
Eppraisal- $72k
Appraisal District- $53k
Cyber Homes- $89k-$102k
The owner is asking $55k and wants it gone fast. I have not looked inside, but the outside seemed pretty good. I just dont know how to come up with an ARV with this one. The homes around are all different prices ranging from $40k-$176k, so its really hard to determine.
Info about the house:
Sq Ft - 1438
Bed - 2
Bath - 2
I kinda leaned toward the county appraisals district but i wanted some input from all of you. Im curious if you can give me some insight on how you determine ARV.
Market value is most accurately determined by looking at the sales price of similar homes that have sold recently (arms-length). Aside from that, the next best thing is to look at the asking price of similar homes that are currently on the market and maybe adjust downward a bit.
ARV=after repair value. You’re not going to find that online as it needs to be calculated. Example, my brother in-law is a GC. He just ordered kitchen cabinets. The difference between a mid price rehab varied +/- 4K from low to high. What you don’t want to do is buy top of the line materials in sub-par neighborhoods. Herbster
Ask a realtor for a cma (comparable market analysis) that shows all active, expired and properties sold within past 90 days within 1/2 mile of subject, perferably in same subdivision. You’re going to need to see all details of property including #bed/baths, sqft, parking, construction, etc. Use that to estimate after repaired value. Make sure to take note of number of foreclosures sold and for sale as they will affect values negatively. If too many of them the buyer will have hard time getting financing as well. Finally, if really want to go forward order appraisal or bpo.
Determining the value of a property is an entire knowledge sub-set. Trying to determine value from just looking at on-line sources that provide a number (or even range of numbers) is not a good idea.
Invest some time in learning how to use raw comparable sales to determine value yourself (or hire someone to do it for you if you’re personality is not suited for that type of research activity).
This is one of those topics that bird dogs and wholesalers working with me get drilled on because it is CRITICALLY important for deal selection and sifting and sorting.
look at the interior and get a rehab estimate, , if it looks good then get a contractor to go with you to get firm numbers
I work a certain area,I follow trends in listing prices (and this can change within a few block area), have MLS info on sold comps, this is one of the advantages of working a certain area, you get to know it well,which helps a lot …
as soon as I have a contract I order an inspection, if foundation work is needed have it inspected and have my contractor go over and give me an estimate for rehab . I also try to work a deal with an appraiser for a 'mini-appraisal, no lavish paperwork, I just need his estimate based on the repair list I give him,its only for my working knowledge, not for the mortgage company (they have to order through a pool anyway),but it gives me more info in a house is a go or not,I can normally have all of this done within a few days of having an accepted contract, well within my inspection period…
Is there a fee to pay when asking a realtor for cma? Same question applies for asking for MLS. Also, do we add up the prices the comps sold for and divide by number of properties to determine FMV?
There ususally isnt a fee for a cma unless the realtor is real jerk :biggrin
as for comps, you are looking for very similiar properties to make an educated guess what an appraiser would value it at. The more similiar properties you have within a half mile, with high sold prices the better
If you are actively working with a real estate agent I see no issues asking him for CMA or comps or whatever you wish to call it. But if your not then just calling some random RE agent to get him to do work for you without that relationship I dont see him doing any work for you.
I try to create a relationship that is mutually beneficial.
That is my reason for asking because I am not currently doing business with any realtors. Outside of comps I’m not clear as to what else we can offer each other if I’m wholesaler?
You can offer the agent leads that you know might be coming on the market but for one reason or another did not work for you. An agent would be very happy to hear about people considering selling their home but have not listed it with anyone yet.
Keep in mind some agents make their money just listing homes and allowing others to hustle up the buyers. In order to work out a relationship that will be mutually beneficial you must understand how the other party gets paid.
Zillow - depending on where you are in the country - is worthless! In Texas, we’re a non-disclosure state. Meaning, we do not show on our Deed, how much you paid for the property. This is where they pull their information. In California, where Zillow was founded or started, the price of the sale is listed on the Deed. So their accuracy in pricing in CA is going to be much more accurate than in TX.
That being said, your best bet is to get on the phone with a couple local Realtors and ask them to pull up the last 3 months SOLD comps in the immediate subdivision. Don’t go with a radius or anything outside the subdivision because it will skew your numbers. Only go 3 months back because the market right now is volitile. Get the comps and do an average of the $/sqft and then apply that to your subject property. This should give you a basic ARV. Then, ask the Realtor to send you everything in the same subdivision thats active and pending. This will give you the competitiion in the hood so you can get an even better idea on the pricing so you’re selling a competitive deal.
In my area, Washington state, the county has records of all sold properties in that neighborhood. I like to start there, compare sqf. Ft., bedroom, bathroom count, garage, try to get as like the subject property as possible that are within 1 mile or less and are an arms length transaction. This means you throw out any foreclosures and quit claims and transfers to trusts.
There also seems to be a slight misconception in the ARV dept. In most cases it doesnt matter what the cost of the repairs are, that in its self doesnt dictate ARV, its what condition the house will be in, and what the details of the house are compared to what has sold and what competition is on the market for sale that dictates ARV.
I am a lender and so I tend to follow what appraisers follow in the repair dept. as far as estimating a rough repair cost. I use www.marshallandswift.com this is their cost estimating hand book or software with up to date pricing including rate per hour pricing for the area of the country that your in. Now dont ever think this will replace actual contractors bids especially when its a high dollar item or specialized work, but its a good overall basis for cost.
Remember to keep your process as simple as possible, find a way to error in your favor, and for the most part you will be fine and putting more offers out there instead of being stuck in analysis paralysis…Hey ive been there, but you gotta streamline it
I would call an Real Estate Agent in that area to run a comp. These should be run with no obligations. I would be clear with them upfront that you don’t intend to use them (as a Realtor i would be pretty annoyed to know I’ve wasted my time, but knowing in advance I would still run the comp with the hopes that if you ever needed an agent you would come back…just my opinion).
Have you contacted the owners? I’ve seen some houses sitting vacant for months because the banks can’t foreclose or don’t have the title info they need. If that’s the case you may run into some obstacles.
Call an agent and get comps. If you are planning to flip tell them you are interested in listing it with them. If you are planning to rent find an agent that manages rentals and communicate that you are interested in them managing it. That will be by far the best and most accurate way to determine ARV.
Use an agent, they will be able to come up with sold comps nearby for similar properties in the last 3-6 months. By far the most accurate, the others are good for ballparking.
If you find the seller is asking to much than here is what I recommend. Say you will only pay 45K and he is asking 55K. Offer him 35K that way 45K is right in the middle. That will be an even compromise and is a very effective negotiation technique. I use it all the time and often get cussed at with my initial offer but it somehow works out when we meet in the middle. I hope this helps.