I just found an REO with ARV of around $135,000 to $140,000. Just saw it today and looks to be in pretty good shape. Roof, plumbing, electrical, kitchen, landscape all look good. House is a 3/2.5 2 story colonial built in 1989. It has also been treated for termites and doesn’t appear to have any damage from that. It does need a fridge, stove, carpet for 803 sqft and possible a new heater/AC (although they do both work). Where I am uncertain is with the wood siding. It appears that in two isolated instances where the gutter isn’t doing it’s job and some runoff is occuring (which will also have to be repaired) has made some water damage to some of the siding. Now I’m a newbie and have heard to stay away from water damage. But it appears to be just on the exterior siding and doesn’t show any water spots on any ceiling in the house. Is this something where I can replace the damaged siding after fixing the gutters. Or is there usually more to it than this. The exterior/interior also need paint. They are asking $117,500 and I was thinking about offering $100,000. I haven’t done research on all the repair costs yet so my offer may change. I was aiming for around $20,000 for my troubles and was wondering if you guys thought I could make this work. Also, didn’t know how much it would cost to reside the entire house which is around 2800 sqft. Please help
It looks to me that the bank is still basically wanting retail for this house. I’m just roughly guessing that it’s going to take about $10K in repairs to fix this house. $117,500 + $10,000 = $127,500; which is dangerously close to your retail estimate of $135,000. Throw in closing costs, holding costs, a few unexpected repairs and you are AT retail.
I’m assuming that you’re planning to rehab and flip this house. If so, even if you buy it at $100,000, this deal is still too thin for me. As a rule of thumb, I usually assume that you can sell a property relatively quickly at 85% of market value. In this case, 85% of $135,000 is $114,750. Therefore, I’d back out the numbers from there. So, $114,750 - $10,000 repairs - $20,000 profit - $3,000 holding costs and contingencies = $81,750. Therefore, $81,750 is the max that I would pay for this property. I doubt if the bank will accept that offer today, but it’s worth a shot. Even if they don’t, keep submitting it every month or two and you may eventually get it!
Good Luck,
Mike
Thanks alot. I think I will offer around 82000 or so and see if they take it. Your right though I do think 100,000 is too thin of a offer. But it’s only been on the market for a couple of months or so, so I’ll probably have to resubmit every month or so.
Thanks again
Charles