Posted by Maggie on March 07, 2000 at 21:11:22:
Tom,
I guess that’s what comps are all about. I recognize the work involved, but that’s part of the game. I was just really confused on the whole official appraisal thing prior to either the offer or flipping it. I need to go back and listen to the tapes again.
Thanks for your time.
ARV via appraisor sequence: time to do it before offer? - Posted by Maggie
Posted by Maggie on March 07, 2000 at 09:46:23:
I am listening to LeGrand’s tapes re. wholesaling and he gives the formula for determining maximum allowable offer based on the After Repaired Value. He says to determine the ARV via an appraisor provided with the list of repairs you intend to do. However, he also teaches how to determine repair costs quickly so you can get your offer in first before the people wasting time crunching detailed numbers. My question is, finding an appraisor and having the appraisal done all before making the offer seems to defeat the quickest offer approach, so how does this work? I could determine ARV through comps, but then what if the appraisors ARV is way off from what I based my offer on?
Basically I am confused on at what stage in the structuring of offer process do I have the official ARV established through an appraisor when I am supposed to be beating the crowd? Despite the time element, I do understand how to establish my ARV and my MAO, but it doesn’t look like it’s as quick of a process as is suggested we need to do it in.
Thanks. I’m just lost again.
Re: ARV via appraisor sequence: time to do it before offer? - Posted by JPiper
Posted by JPiper on March 07, 2000 at 19:48:32:
I was surprised to hear that Legrand recommends this approach of hiring an appraiser…either before or after the offer.
Before would make NO sense…if you’re making a number of offers this is quickly going to be a large cost that you’re coping with.
Doing it after doesn’t make much sense to me either. Another cost, and you should already know the market prior to making the offer to begin with.
You establish value by running comps. That means getting out in the market, looking at properties for sale, driving by what has sold. Looking at what expired unsold.
It takes some time to develop some knowledge…but it isn’t rocket science…you do it everytime you go to any store…you compare things as to value.
JPiper
Re: ARV via appraisor sequence: time to do it before offer? - Posted by TomC (Md)
Posted by TomC (Md) on March 07, 2000 at 16:48:05:
Maggie:
One method is to become your own appraiser! To do this, you need to find a small section (the actual size will depend on population density) of town to target and get real familiar with what things are selling for. Get recent sale prices from the newspaper’s real estate section, or your county records. Visit some open houses in your target area on the weekends. Follow up with the realtor later to find out the sale prices.
Before long, you will have a “gut” feeling for what a good ARV is within a few minutes of seeing the house. I hate to say this, but it takes WORK. But you will be able to spot the bargains instantly!
I have a target area for properties within a 5-mile radius of my home. I now own 4 properties all in my target area. Living in the same area makes me an “specialist”, since I know the good and bad areas, and what is desirable or not.
Best of luck to you,
TomC
Re: ARV via appraisor sequence: time to do it before offer? - Posted by Maggie
Posted by Maggie on March 07, 2000 at 21:07:56:
JPiper,
You’re right that it wouldn’t make sense to run appraisals before making offers because the expense would be ridiculous when making multiple offers. I’m new at this and am afraid I am still thinking on a small scale. My mistake. However, LeGrand does suggest providing a list of future repairs to be done on a property to an appraisor and having them use that to determine ARV. Now that I think of it, I’m not entirely sure what purpose this serves after the offer has been made other than to be able to offer it to your prospective wholesale buyer to justify your asking price.
I’ve only listened to the wholesale course once, though, so I could easily have confused myself into oblivion at this point.
Thank you for your time.