I put this property under contract to flip and find buyers in 14 days, The morgtage is 105k. property value is 80k. how can I determine my ARV?. My buyers don’t like to buy this kind of properties, what would be my exit strategy? or Can I ask the seller to carry on the 25k. remaining mortgage? if he doesn, how can I get out of this deal? help!
Does the property need repairs? If so, how much? What is the price you have the home under contract for? How did you get the value of $80K? In this situation, you could possibly do one of 2 things.
If you’re just getting started with wholesaling and flipping, then you already know that the houses in which you look at investing frequently need some type of repair. Your ARV is the After Repair Value. When evaluating properties to flip, there are things you need to figure out to arrive at this number including ARV:
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What are comparable properties selling for? Find three other properties that are the same type as the subject property and are also within a half mile radius of that property. Then, find out the current market values (no older that 6 months) of those properties you can do this on sites like Zillow.com and Realtor.com.
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Take an average of those values to figure out your target ARV. For example:
Property #1 = 200K
Property #2 = 215K
Property #3 = 225K
The average of these numbers is $213K -
Figure out how much in repairs your property will need (for example, let’s say 25K)
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Calculate $213K (ARV) x 70% (.70) - $25K (repairs), and - (Assignment fee) = (this should be your max offer for the property)
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Then, add the fee you would like to get for the wholesale on top of the contracted sales price, and offer it to the buyers. (Leave some play room, as they may haggle with you on the price/fee)
Or, you could figure ARV this way:
House 1 : $200,000
House 2 : $185,000
House 3 : $191,000
Total Sales : $576,000
House 1: 2,000 Sq. Ft.
House 2: 1,900 Sq. Ft.
House 3: 1,825 Sq. Ft.
Total ft2: 5,725 Sq. Ft.
Let’s do some math:
Total Sales Price: $576,000
Divide by Total ft2 : 5,725 ft2
Equals $100.61/ft2
Our Property: 2,115 ft2
Times: $100.61/ft2
Estimated Value: $212,790
I hope this helps you. If you have any additional questions, let us know. Thanks in advance.
Homesalenow that was awsome thanks for the break down!
Hey Mzlady, can you clarify a few points for me please to help you with this deal.
You said the mortgage is $105K correct? You also said the “value” is $80K correct?
If these two numbers are correct ofter using homesalenow formula than you have a short sale situation. As a new investor I would recommend staying away from short sales. I would find a good Realtor to refer this deal to and focus on deals with equity or deals with a good loan and little to no equity to negotiate seller financing.
homesalenow is dead on the money with the formula for wholesale deals. Come back with the true numbers and I’m sure one of us can guide you through the deal.
Cheers 
Sean
Question, exactly what was your exit strategy going into this deal? How did you intend to make money? Just trying to find out what you saw here, out of curiosity.
To answer your last question well that’s easy, just don’t close. Your only risk is whatever you may have given the seller for a deposit. From the looks of the numbers you provided that’s probably gonna be your best exit strategy.