Christopher Harold wrote:How would you determine the ARV of a property when it doesn't have any comps? For example, this subdivision has nothing but 3/2 and 3/1 but the seller of this house added a bedroom and bath, so now it is a 4/2.5. The house is larger than the others in the area so no comps can be found within a 1 mile radius.
The only comps that can be found in the subdivision are the smaller houses, roughly 500 to 800 SF smaller. What should I do?
Chris
Here's my two cents. Take it for what it's worth. Your question is a very common situation, especially in many of the outlying areas of the Metroplex. Deals are all about risk verses reward. The higher the risk the more reward. The lower the risk the less reward (profit) I'm willing to take. If you have no SOLID comps that's a higher risk in my opinion. So my recommendations are this:
Pull COMPS with MLS/Investway for the subdivision with no filter criteria to make sure you know what has sold for the past 6 months, 9 months and 12 months, looking for like properties, condition, and the cost per sq ft
Pull COMPS for a 1/2 mile radius and 1 mile radius, looking for like properties, condition, and the cost per sq ft
I might even look at ACTIVE Listings as well to see what is currently listed, DOM, and their condition as compared to your property (but remember these are active listings and not solds and are only the asking prices)
I might even look at the TAD value, Zillow, CyberHomes and eApprasial values, looking for trends and info about the areas (But I don't make offers based on their values)
Based on your discussion with the seller, is he motivated, are they willing to deal, based on seeing the house and the condition and location does your gut tell you there is a deal?
If your gut feel is there is a deal, you might consider paying for an apprasial once you have it under contract but I personally wouldn't do this unless there was a BIG payday in site. An appraisal will just confirm how big.
If your seller is unmotivated, if your gut feel is the numbers are slim, if there are alot of repairs, if you don't like the area you might consider passing on the deal OR take an Option to Purchase OR us a contingency in your contract allowing you to test the market and try and sell it at a higher price. Then put your string buyers list and marketing skills to work and find a new end buyer.
All about Risk versus reward. Hope this helps.
Call if more questions
Tim
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