How to Estimate the ARV of your Fix-and-Flip Property by Analyzing Local Comps

Analyze comps to estimate fix-and-flip property ARV

Comparable properties (“comps”) are homes in the vicinity of your fix-and-flip property that were sold in the past three months. Analyzing local comps will give you an idea of what buyers are looking for and what they might be willing to pay for your property after you have made all of your planned improvements.

What to Look for in a Fix-and-Flip Comp

To get the best estimate of your fix-and-flip property’s after-repair value (ARV), you will want to compare it to homes that are similar to yours in the following aspects:

  • year built
  • number of bedrooms
  • number of bathrooms
  • interior square footage
  • amenities (pool, jacuzzi, sauna, fireplace, deck, laundry, etc.)
  • finishes (countertops, cabinets, flooring, fixtures, etc.)
  • lot size
  • landscaping/curb appeal
  • garage/parking

Make sure the comps you select are not distressed properties. They should be representative of the condition your fix-and-flip property will be in after you have made improvements.

Finding Comps Near Your Fix-and-Flip Property

If you have access to the local MLS (a private list typically restricted to real estate agents or brokers), you can find detailed information about any listed property. If you don’t have MLS access, you can find the information you need on free public real estate sites such as Zillow and Realtor.com.

Record Your Findings

Using a software spreadsheet, or even a hand drawn matrix, create an organized visual representation of the specific features each recently sold property offered buyers. Examining the data side-by-side, you can easily compare the comps’ features to the features your property will offer buyers when your improvements are completed.

The example below compares three comps to a sample fix-and-flip property in Woodland Hills, CA:

Sample Fix-&-Flip Comp #1 Comp #2 Comp #3
Property Address 123 Sample / 91364 234 Compone 91364 345 Comptwo 91364 456 Compthree 91364
Property Style Craftsman Ranch Ranch Craftsman
# of Stories 1 1 1 1
Year Built 1975 1998 1975 1970
Square Footage 2,175 2,330 2,200 1,990
Lot Size .36 acre .33 acre .25 acre .40 acre
# of Bedrooms 3 3 3 3
# of Bathrooms 2.5 2.5 2.5 3
Laundry Location Laundry Room Laundry Room Laundry Room Laundry Room
Parking 2-Car Garage 2-Car Garage 2-Car Garage 2-Car Garage
Heat Type Electric Wall Heat Central  Gas Central  Gas Central  Gas
Air Condiioning None Central Central Central
Other Amenities Master w/en suite & walk-in closet Kitchen reno & master w/ en suite & walk-in Full reno. Master w/ en suite & walk-in. Deck off master. Full reno. Master w/ en suite & walk-in. Fenced yard. Gas fireplace in LR
Sale Price $749,999 $949,500 $989,999 $999,500
Price per Sq. Ft. $344.83 $407.51 $422.72 $502.26
Location Notes K-5 school =9,
middle school = 7, no vacant homes on block.
Same as subject property. Same as subject property. Same as subject property.

A side-by-side comparison shows that the house with the highest sale price is comp #3, a fully renovated 1970 Craftsman with a large fenced yard. This is good news, since the subject fix-and-flip property is most similar to the Craftsman comp in style, square footage and lot size.

It is interesting to note that the lowest priced comp is a larger, newer ranch with a kitchen upgrade. The significantly lower sales price on this larger, newer home could suggest buyers in this market are willing to pay more for a fully renovated older home vs. a newer build with added on upgrades.

With a central HVAC upgrade and full interior renovation, the sample fix-and-flip property could potentially sell in the $990K – $999K price range. On paper, there appears to be potential profit in flipping the subject property.

This is the point in your research where a walk-through of the subject property and a visual examination of the neighborhood and comps is advised in order to make a more precise determination of potential value. Be mindful that school district boundaries can significantly affect value, so do your homework thoroughly now to avoid surprises later.

For a step-by-step “how to” on what to look for during your walk-through, how to estimate ARV,  evaluating your property’s as-is condition (and needed improvements), and where to find school quality scores for your fix-and-flip property and comps, download our free e-book Evaluating Fix-and-Flip Property Value & Condition.