How to Calculate Net Realizable Value in Foreclosure Sales
NRV or net realizable value is a commonly used measure for taking inventory. In this calculation, the value of an asset is determined by an estimate of the sale of the asset (at market prices), less a charge for the cost of acquisition. For a foreclosure this means estimating the market price for the property and the costs associated with maintaining the foreclosure until disposal or sale.
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Instructions
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Determine and sum all costs associated with selling the foreclosure. This includes deductions for time on the market, selling expenses and holding costs.
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Determine the current value of the foreclosed property. This can be determined by asking your real estate agent for recent sales amounts in your neighborhood or by looking up recent home sales with similar features as the foreclosed property. You can also look up recent home sales in your area by going to Zillow.com. Worst-case scenario is that you can hire an appraiser for roughly $300.
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Subtract the costs to sell the home from the estimated current value of the home. For example, let's say a property had a market value of $200,000. The property is foreclosed and held by the bank. The bank expects that it will take 2 years to sell the property at a total cost of $20,000. The NRV is $200,000 - $20,000 or $180,000.
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