If you’re someone who flips houses within the real estate market or is thinking of entering this world, one of the most important factors in your potential profits will be accurately determining home value. At Rockport Properties, Inc., we’re here to help you find accurate, reputable values for a fixed home.
The value of a home after repair is called ARV, or after-repair value. Let’s look at the basics of ARV, how you can use that number to benefit you, and how you go about calculating it.
Getting an accurate value for how much a home will be worth once it’s fixed up is vital, and failing to do so can cost you a huge amount. This is what the ARV value is meant to reflect, but you need to find the proper sources to get an accurate value – there are lots of pretenders or less-than-reputable online sites out there that could lead you in the wrong direction. More in a bit on how to find reputable information on calculating your ARV.
Maximum Allowable Offer
ARV isn’t actually the final number you’ll need for your selling purposes – that’s MAO, or maximum allowable offer, and it uses ARV to be calculated. In general, you’ll calculate MAO as 70 percent of the ARV, then subtract the cost of repairs to bring it to this point. This formula can be altered slightly in some cases, and some shoot for closer to 65 percent of ARV. Many investors will buy for slightly higher than 70 percent in higher price range houses that need fewer repairs.
Accurately determining ARV starts with comparable sales. These are houses that have sold recently and are similar to the subject property – be sure to look at homes that have already sold, not homes on the market.
Texas is a non-disclosure state, meaning that public records of house sales are not available. However, there are numerous other resources for finding this information, including several free or paid websites that track this information. In addition, great real estate professionals like our Rockport brokers can help you get comparable information. Use factors like area, house size and age, sold date and conditions to determine the rough ARV value.
For more on how to accurately value your fixer home, or to find out about any of our homes for sale or Rockport listings, speak to the pros at Rockport Properties, Inc. today.