Im trying to figure out how much to offer for a house in a high end area (average homes sell for ~300-350K).
Its an REO but not yet listed, couldnt get the shortsale done… I am thinking of buying to fix and flip… Now the house has about 20-30K worth of work…
BUT, the thing is that during the SS process the house was BPO’ed at 170K and 229K (i kept pushing the bank with 100K in fix up costs, if you fixed every little thing, even cracks in driveway and stuff)… But, in reality, i dont believe the costs to be that high, so i think i may have influenced the BPO’s to be lower… Now if i follow the 70% rule - expenses, that would make the max offer around 130K-160K…
But, this is a pretty large house, 5 bedrooms, 3700 sq ft… That sounds like an extremely low offer and im curious if i drank my own koolaid on this one… I realistically think the fix up (things that will get the house sold, not all the little things) can be done for about 30-40K and can probably be sold for 260K…
How many of you guys buy in the high end houses and what kind of offers do you guys put in? What general shape are these houses in that your buying? I mean, this house isnt a ghetto rundown shack, its in a high end neighborhood and is a rather large house in average shape (the basement has sewer flood damage though)…
What do you guys think? Im very interested in hearing folks opinions as i have a nagging feeling that if i let it go to MLS, the house could sell quickly and tons of competition could appear as there arent that many houses on the market in this neighboorhood…
Since you’re paying cash, I’d stick with 70% of the ARV. Also, since this is a high end house for your area, are you absolutely sure you can get the fix-up done for $30 - 40K? What kind of product will you end up with at that amount of fix-up, and how long will it take to sell?
It sounds like you’ve invested a lot of time into negotiating this property with the bank, so I can see why you’re trying to make this work, but I’d be careful to not let my emotions influence my decision making.