45k for repairs and holding is a lot. If it is a major rehab, then it will take long time to repair and you never know when something goes wrong. Also, on a $280k home, if you sell it through a realtor, then you will pay the realtor $14k. That leaves you with about what? $14k? if something goes wrong in a large rehab, you will break even or lose money. Is this deal worth it?
Hi guys:
I believe I am confusing everyone on this deal 
The asking price is 219k not 280k. After a market anaylysis the FMV on a like property that needs work is 280k not the listing price.
So, essentially i’m going in at about 20% below 219k.
Hope this clears it up a little. Thanks for all the advice. And Keith, I will definately have another analysis done covering a broader area around the subject property.
PS - in response to fadiz - the 280k is the market analysis for house that sold which needed work. Meaning someone bought a similar house for 280k, fixed it up and relisted it for 345k (but it hasn’t sold yet).
This is a great topic
Thanks again
dlmcgill
dlmcgill,
Before you start making offers on properties, you might want to make sure that you at least know what the numbers are and what they mean.
FMV (Fair Market Value) is what the sale price of the property should be in an open sale situation. ARV (After Repair Value) is what the FMV of the property should be after it is repaired to good condition.
If I am understanding you correctly, you believe that the current FMV of the property in it’s “as is” condition is $280K, and that the ARV of the property would be $345K (which is based only on a listed price, correct?).
If these numbers are correct (questionable, as they’ve increased greatly in 3 days or so), then a $196K offer is still 70% ARV minus your total costs ($45K), or roughly 57% of the total ARV, whatever works for you.
Raj
I had to register just to respond to this thread.
“The house has been on the market close to one year. I figure I start low and wait him out.”
So, the subject property has been listed for a year at 219k.
“The 280k is the market analysis for house that sold which needed work. Meaning someone bought a similar house for 280k, fixed it up and listed it for 345k (but it hasn’t sold yet).”
Do you see the fundamental question that arises from these two statements?
Why did the buyer of the 280k flip not just buy your subject property for 219k?
If 280k is FMV, then why did the seller list at 219k and not 280k? It’s not like he’s hurting for the money, if it’s been listed for a YEAR.
What are you seeing in the subject property that every other buyer in the area doesn’t? :o
I’ll end it at that.
Hi MadMorgan:
The subject properties original list price was above 280k. Which explains why the other property was sold for 280k and they overlooked the subject property. The subject property’s price dropped several times within the year and is currently listed at 219k. The property that sold for 280k, sold in May of 2005.
Everyone’s post has really made me think about this deal. I think its a good deal for around 180k.
Thanks again:
dlmcgill
Did you actually go see the property yet? I’ve seen a few properties that appear to be good deals on the outside, but once you get into them you find out various things. Let’s see, one place needed new windows, had old boilers in the basement with asbestos, inadequate electrical that would need upgrading, old kitchens and bathrooms, lead paint, old gas on gas stoves, leaking bathroom plumbing, etc. Had to pass on it even though it was listed for 30-50k under what other properties were selling for at the time.
Anyway, you should at least take a look at it first. As someone else already said, if it’s listed and no one is offering their asking price, then that price IS above fair market value. You mind as well make your offer now and stop waiting, interest rates are on a long term trend up although they did take a slight breather last week.
Hi henryinma:
Yes, I took my contractors with me and we estimated repairs.
Thanks
dlmcgill