How much is this ugly house really worth? Part 2

Now that we know what the main areas of repair are and the importance of getting a good estimate next, we need to know how to get “Comps” comparisons or figure out how to find the fair market value of a property. This is another critical area and is traditionally determined by a licensed appraiser. Although that is the most accurate approach, it is not necessary for us as wholesalers.

Several things we need to make sure we understand…..

We need to find out the “ARV” or value after repair of the house we are looking to buy. This will determine what it is worth after the repairs are complete. And that is the value that we quote to our buyer (investor). Whatever you do, DO NOT use foreclosed homes as comparisons. Those houses reflect the lower end of the market. The value of the comps is what we will use for our 70% rule.

Networking to get MLS (multiple listing service) access through real estate agents, but that takes time. So if you don’t have access yet, don’t worry about it now. Instead, go to http://www.Zillow.com and get the ARV for similar properties in the area. I like to lean on the conservative side, so don’t choose the highest or lowest priced home, but rather an average.

A quick way to get an IDEA of the value, so you can negotiate the price over the phone with the seller, is to go to the county appraisal district. There you will see the county’s value for the property. Please understand that this value is a conservative value estimate and, in most cases, less than fair market value. But it is a good bargaining tool. So when you ask the seller how much he wants for the property, you can instantly compare it with the county appraisal district.