Current Property Value vs After Repair Value (ARV) - Realestate Comps Today

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Current Property Value vs After Repair Value
(ARV) - Realestate Comps Today
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property-value-vs-after-repair-value-arv
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When looking at comparable sales, it's important
to understand the difference between a property's
current value and it's after repair value, also
known as ARV. A property's current value is how
much a buyer is willing to pay for it in its
current condition. Therefore, we can't base a
property's value on that of a neighboring
property's sold price unless the two are in
comparable condition. For instance, if a
neighboring sold property was recently remodeled
with new paint, carpet, flooring and counter
tops, etc., but yours hasn't been updated in 20
years, those two properties really aren't
comparable because a buyer would pay far more for
the upgraded property than the outdated one.
https//www.realestatecompstoday.com/blog/current-
property-value-vs-after-repair-value-arv
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In this case, you would either want to upgrade
your house before selling, so you can increase
its value to that of your neighbor's and sell for
a higher price. Or you would need to use sold
comps of houses that also haven't been updated
recently. In order to see the condition of a
comp, just look at the photos linked to it's MLS
listing. If there aren't enough photos, search
the property address online and you may be
surprised at what you find. Quite often you can
find more photos of a property from other
previous listings. The term ARV is often used in
the world of real estate investing but can also
be applied to typical buyers and sellers. How you
use an ARV depends on what you are trying to
achieve. It's important to know the Current
Value vs the ARV for 2 specific reasons. When you
are buying, you want to buy for the lowest price.
But when you are selling, you want to sell for
the highest price.
https//www.realestatecompstoday.com/blog/current-
property-value-vs-after-repair-value-arv
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Let's first take the case of a buyer. If a seller
had not upgraded their property but was basing
their asking price on houses in the neighborhood
that are upgraded, you would now have a stronger
position for negotiating a lower price with the
seller, using the photos and sold prices of the
unimproved properties to support your lower
offer. In this particular case, your goal as the
buyer would be to buy at a lower price because of
the outdated condition of the house. You can then
fix it up at your leisure once you have moved in,
or fix it up quickly to increase its value and
equity for a higher selling price if you plan to
sell it as an investment property. In the case
of a seller, if your house hadn't been upgraded
to the highest ARV's in the neighborhood, your
goal might be to fix it up to increase its value
for a higher sale price and a bigger profit.
https//www.realestatecompstoday.com/blog/current-
property-value-vs-after-repair-value-arv
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property-value-vs-after-repair-value-arv