# Formula for Determining Offer Price?

Hi,

I’m just starting my journey as an investor and I am planning to start by wholesaling. Is there any kind of formula that can help me determine what my offer should be? (keeping in mind my buyer’s profit, repair estimates, my fee, ext)

Hi,

``````A 30% average discount below fair market value for a pristine, updated home! If property needs updating or remodel / rehab then 30% plus (+) the cost of repairs as a discount!

GR
``````

Thankyou!

Thanks for sharing this useful information here.
It not only helped the member who asked that question but also me because I didn’t have any knowledge of how to determine the offer price…!!

If the home is pristine and updated, why would it be discounted 30% BELOW fair market value?

You would be surprised. Foreclosure reo property could be just one of many reasons

Here is another example you can use to…ARV \$100,000 x.65 = \$65,000 - \$15,000 (Repairs) = \$50,000 MAO to the seller. (\$50,000 is what you offer to the seller)

Once negotiated and contracted with the seller at \$50,000. Market to buyers at \$65,000 (which is 65% below the market value), this leaves a potential \$15,000 profit for you (the wholesaler).

Hope this helps… :beer

A \$100,000 property at \$65K is not 65% BELOW market value - it is 65% OF market value…a \$100K property at 65% of market value = \$35K…I’m sure that’s what lsheriow meant…

Keith

I try to use the worst case scenario when preparing my offer.

I first use great care in deciding the after repair value.

Then I deduct 10% selling cost. 6% agents and 4% closing cost assistance.

Then I deduct the repair costs. (always verify and leave room for unexpected)

Then I deduct my hard money cost and holding cost. (12.5% for me. That’s 5 points and 15% interest for six months)

Then I deduct my intended profit (usually 25k)

The balance is my offer. My only variable would be on lower dollar houses I might put in a smaller profit.