Posted by Don (VA) on August 17, 2006 at 18:27:54:
Although, in an up market, you’re not supposed to take into account appreciation–that is, you calculate a deal based on today’s ARV even if you expect the property to appreciate–in today’s market I think you have to take into account a decline in prices (if that’s affecting your market). For instance, if your analysis shows that properties have been losing about 2% of their value per month, and you’ve got a rehab that’ll take 3 months, you’ve really got to build an assumed 6% decline into your numbers.
We’ve all heard the “formulas” out there used to determine a Wholesale purchse. My question is, what is the best way to determine what the true ARV is in this market?
Some people think that they’re buying @ 65%LTV and finding out after that they bought @ 85%LTV!
Re: How to determine ARV in this market? - Posted by Natalie-VA
Posted by Natalie-VA on August 18, 2006 at 17:47:33:
Steve,
I look at comparable “solds” for the last 6 months and come up with a number. Then, I look at the actives to see where I would have to price it in order to be competitive against other listings. Sometimes the second number is lower than the first, so I’ll go with that one. In our current market, there could be a big difference.
This is a good reason not to go by an appraisal, because an appraisal does not look at the competition.