Let's just say you ran across this deal and would like to wholesale it or flip it to a rehab investor. My guess is that you’re not a realtor. And, not only are you probably not a realtor, but you probably do not have access to the MLS. So, how do you accurately determine the ARV on a property so you can flip this deal?
But, before we get into that, let’s talk about how important it is to attain an accurate reading on the property’s value. If you’re a fan of football, you know that it’s a game of inches. Just a few inches can be the difference between a new set of downs… and punting the ball back to your opponent.
Flipping houses is no different.
Wholesaling is a game of numbers. Deviate slightly from an accurate assessment… anywhere along the line, from finding the deal to flipping it… and you could suffer some serious consequences.
The best you can hope for is to lose profit on the deal. That sucks. But, screw up the numbers good enough and you could lose the deal altogether!
That really sucks.
So, here is how you do it….
Wholesalers Secret To Getting Free ARV/Comps
One, find a free site you’re comfortable with. Zillow is a good one. So is trulia.com. We’ll use zillow for this real estate investing training article.
Two, pull comps on the subject property by scrolling down to the “nearby similar sales” box.
Click “see sales similar to…”
Then, sort by distance by clicking the distance arrow:
Use a quarter mile as your range, and make sure all comps within that quarter mile are actually comparable (in the example above, if one of the comps sold for $40,000, I’d discard it).
Add up the average price per square feet of the chosen comps, divide by the number of comps, mulitply by the square footage of the subject property.
So, in the example above:
$73 + $84 + 81 + $98 +$85 = $421 / 5 = $84.20 x 1,476 sqft = $124,279 ARV
So, what does Zillow say this house is worth?
Pretty close. And, pretty accurate.
Since I wrote this training article for REIClub – Zillow has updated it's software and in some instances and markets – it's much easier accurate to get comps. Take a look:
Step 1 Find a Potential Deal – Scroll down to the “Price This Home Section“:
Step 2 Select “Choose Comps“:
Step 3 Select “Get Comparables“:
You can then select or remove those that don't meet your criteria.
Step 4 Select “Continue“:
Step 5 Time To Make An Offer:
Knowing the ARV or the potential for a property is essential when making a wholesale offer to the owners. It is equally as important when you are flipping the deal to rehab investor or other end buyer. Look, the MLS is the best source to pull comps. But, when you don’t have access, you need to what whatever it takes to get an accurate value. Screw it up… and suffer the consequences.