For investors that fix and flip properties, establishing an After Repair Value (ARV) is an important value to develop. The ARV is developed by analyzing a construction budget for a subject project and develops a hypothetical value based on the scope of work. The purpose of the assignment may be for lending purposes or business-making decisions. 

An appraiser considers recent sales to the area and compares them to the expected condition of the subject. Ideally, a construction budget should bring the subject to similar condition of comparable properties in the market area. When properties are updated with unique features or finishes, the market’s reaction is unpredictable. 

In our experience, some sellers over improve their properties. While they may appreciate the features for their needs, certain updates do not translate into greater market value.

In most industries, clients hire professionals for investment advice. Considering that real estate is generally one’s largest asset, getting an appraisal may make sense. An appraisal is a cost effective way to determine what repairs have the most impact on market values. Before spending $10s or $100s of thousands of dollars, hire a valuation professional to provide you with the data.