Besides comps, is there an alternative way to get a solid ARV?
Also I have found a brand new house built in 2009. The house has beeen sitting empty since it eas finished. It sticks out like a sore thumb. It’s one of those houses that don’t really fit in the neighborhood. Anyway, I can’t find any info except land info. How do I determine the estimate value on this house? I don’t think there will be any comps for this house near by.
Hi,
When a property is appraised for a sale the appraiser will look at sales that have occured within the last 3 months, 6 months or year and are within 1/4, 1/2 or 1 mile of the subject property. Now you really want comparable sales, same lot size, same sq.ft. and same 3 bd / 2 ba properties with matching ammenities.
You are looking for closest properties within 1/4 mile and newest age less than 3 months, this is the appraisers primary target.
There are two other ways to determine value or FMV. First, to get an idea you can look at listed properties to see what comparable properties are listed for, however this does not guarantee the property will sell for that price, however pay attention to days on market as when properties are selling quickly the asking price may be close to the purchase price.
Now I have gotten zillow and aol home values and averaged them together just to get an idea of value (This is not an exacting science as zillow and aol home values data may be months or years old), however I always look at comps if I get an excepted contract.
Cost approach is another method to determine value, this basically takes the value of land and pairs it with your area’s cost per square foot to build a standard home and adds a profit & overhead value to it to come up with a projection of value according to cost.
You can also take an income approach, this method is really good if your looking for portfolio property and want to project fair market rent (income) against the principle, interest, taxes, insurance and maintence costs to determine whether your rental income will cover cost’s. (This example is one of my properties, FMR - $1000, expenses 1st TD - $655 PITI (72k TD) and $50 per month lawn care. Now we project 10% per year for maintence or $100 per month, but the property would actually support a payment of $750 and still have $100 positive cash flow, so if I go and look at my mortgage calculator this property would support a value right about $100k in value) which is this properties value now.
Comps are always the best and only way to really determine value!
The property probable never recieved a final on the permit, so it does not show up yet in real estate records as a finished property.
Cost approach is probable a good way to get an idea, however in this case with a new home, an appraiser may go out and find comparable new properties within one mile of the existing property, or maybe further out depending on the market.
Good luck,
GR