Using After Repair Value to Your Advantage




Using After Repair Value to Your Advantage

At one point you might need to make a sale of a property. You might be selling as the property owner, sales agent, or a normal broker. You are likely to encounter the term After Repair Value in the process. The information below highlights all you need to know about After Repair Value (AVR)

What is After Repair Value?

 

The term After Repair Value is common in the field of real estate. The term refers to the approximate worth of a property after the completion of repairs. You need to learn how to calculate the ARV of your property before you put in on the market.

How to Calculate After Repair Value

You need to make an accurate calculation of the ARV. The applicable formula is;

Property Purchase Price + Property Renovation Value=ARV

The costs that you incur while renovating your property should not exceed its renovation value. You need to use the correct figures to get an accurate estimate of your profits.

How to Maximize on ARV

The market has a few variables that may affect your After-Repair Value. You can use the following tricks to maximize your returns.

· Hire a Qualified Repair Team

The team working on your repairs determines how much you might make in the end. You need to find an experienced team to handle your renovations and upgrades. Buyers will not bargain much if they find that the property is in excellent condition.

· Buy the Materials that you Need in Bulk

Draft a list of the items you need for the repair and use the checklist to make bulk purchases of materials. Take advantage of bulk purchases which come with high discounts. Check the discounts on offer in different rehab stores and liquidators to find the most favorable terms.

· Research the Condition of the Market

You need information about the market at your fingertips to increase your profit. Compare the prices of similar property to the one you are selling. Use the figures to calculate an average price for your property. Budget for your repairs within a range that ensures you get high returns.

· Seek the Help of a Professionals

In a competitive market, you might need to enlist the help of a property valuer. It is crucial to hire an extra set of experienced hands with the knowledge of the market. Your property valuer may also double as your sales agent to seal the perfect deal for your property.

· Minimize your Expenses

You can cut on outgoing expenditure whenever it is possible. Use your DIY skills to handle the less demanding repairs. You can also cut off professional valuers and sales agents if you are well endowed in making sales. If you have a ready market, you shall not need a professional valuer.

· Use Accurate Data in your Calculation

An accurate ARV provides estimate amounts of data on the profit that your property can fetch. Inaccurate data contributes to your disappointment in case your property sale does not succeed. Base your comparisons on similar properties that are in your neighborhoods or ones that resemble.

Advantages of ARV

These are some of the merits of After Repair Value calculations.

· Acts as a Guide while Setting a Price

The figures give an estimate of the amount that you need to spend to see the repairs through. You can draft a budget that maintains a handsome profit margin. The accurate figures allow you to set a price that favors you and the buyer. You also find a price that might attract buyers.

· Helps you in Determining the Amount of Input Needed

An accurate AVR clearly shows the value of the property you need to renovate. The input that you use to revive the property determines how much you can make. It acts as your guide to determining if you need professionals or if you can handle some repairs using your DIY skills.

Disadvantages of ARV

Highlighted below are demerits of using After Repair Value projections.

· Projected Results are not Guaranteed

Some market variants are likely to affect the final price that your renovated property fetches in the long run. In some instances, you might have to sell the property at a lower price than you had stipulated. You should project all the outcomes to get prepared for all results.

· The Process can Be Expensive

While calculating an ARV for your property, you need to have accurate digits. Hiring property valuation professionals can be quite expensive. Some repairs may turn out more costly than the initial cost of the property in question. At one point or another, unprecedented repairs might pop up, disrupting your budget in the process.

The bottom line is that a distressed property may fetch you a reasonable price. All that you need to do is repair or upgrade the property. An After Repair Value will help you determine the amount of input required to repair or upgrade your property.