You take an average by adding up all the comps and dividing by the total amount ofproperties left. In this case the number is 7.Total: $1,411,500 divided by 7 = $201,642In other words you might expect to sale your house for $201,642.
ARV (After Repair Value):
This is actually a slang term used with real estate investors. Itbasically means about the same as FMV. The difference could be argued stating the ARV ismore of a guess or value that is derived by using comps from houses that were not sold by aRealtor. Hence they would not show up on the MLS. Of course an appraiser can use BOTHCOMPS, but generally sticks to the ones off the MLS. Think of the ARV as a less accuratevalue than the MLS comps ... generally in my opinion.Dealing with short sales you usually find is the FMV and / or the ARV will come in about 10-20% higher than the BPO ordered from the lender. If this is the case you might consideroffering 60% of the ARV or FMV value. This of course depends on the amount of repairsneeded for the property. If you have what is usually classified as a "Pretty House" ... showingvery little repairs, let's say under under $10,000 ... don't expect to get a huge discount fromthe lender. If you cannot JUSTIFY a reason for the lender to accept either a small or largediscount ... don't expect them to accept it. This also dispels the myth that all houses headingtowards foreclosure are good short sale candidates.I will provide two examples below for a better understanding of this.
ARV/FMV: $100,000REPAIRS: $5,000BPO: $90,000 plus or minus 5%
ARV/FMV: $100,000REPAIRS: $15,000BPO: $80,000 plus or minus 5%
ARV/FMV: $100,000REPAIRS: $35,000BPO: $65,500 plus or minus 5-10%Based on this evaluation model. If you had a PRETTY HOUSE and you submitted and offerof $50,000 to purchase it. Can you find anything to justify that? Probably not so don't makeoffers that waste both the lender, your and ultimately the homeowners time. Use the modelabove as a general guideline.Now let's discuss the different loan types. I was speaking in front of a large group recentlyand I called this "The One Thing You Can Ask To Increase Your Short Sale Offers By AtLeast 50%"Why? If you know more about any property if provides you better leveraging and ultimatelynegotiation strategies to target. Not all short sales are created equal.
These loans are found all over the place. They provide the most flexibility especially dealingwith short sales. Using the $100,000 example; You might start out your offer submitting 60%x 100,000 (FMV) = $60,000 ... which the $60,000 is actually 70% of the BPO Price. However