The session focused on educating house flippers on how to independently and accurately calculate a property’s After Repair Value (ARV) without relying on real estate agents.
Key points included three critical rules, five expert tips, and a clear four-step process for determining ARV using publicly available online tools.
The presenter, Jerry Norton, emphasized the importance of using relevant, recent, and nearby comparable sales to avoid common mistakes and ensure profitable deals.
Action Items
No explicit action items assigned during the session.
Three Rules for Determining ARV
Only use comparable sales (comps) that are similar in key features such as home style, square footage, lot size, bedrooms, bathrooms, and garage.
Focus on recently sold comps rather than current listings, prioritizing the most recent sales within 90 days and extending up to 120 days if necessary.
Select comps close in proximity—ideally within the same neighborhood and starting with three to five nearby streets; avoid comps from different neighborhoods, even if close by.
Five Tips and Mistakes to Avoid
Obtain at least 5–6 relevant comps that meet the similarity, recency, and proximity criteria.
Remain objective and unbiased—choose the most relevant comps, even if they support a lower ARV.
Do not estimate ARV if there are no relevant comps; lack of comps means an accurate ARV cannot be determined.
Exclude distressed property sales; use comps that reflect fully repaired, move-in-ready homes.
Avoid speculative ARV calculations based on projected appreciation—use only actual sold data.
Four-Step ARV Calculation Process
Step 1: Use online tools like Redfin, Zillow, Trulia, or Realtor.com to search the subject property’s address and filter for recent, similar sold homes.
Step 2: Calculate the price per square foot for each relevant comp by dividing the sold price by the property’s square footage.
Step 3: Compute the average price per square foot from all selected comps.
Step 4: Multiply the average price per square foot by the subject property’s size to determine its estimated ARV.
Decisions
Recommended calculating ARV independently (not relying solely on agents) — Doing so ensures maximum accuracy and self-reliance, leading to safer and more profitable flipping decisions.