Making offer on very first deal. need help

General Real Estate Investing
1

Fannie Mae bank owned prop. is listed at 395K. We want to buy, spruce up and retail it within 4-6 months. The house needs minor touch-up (ext. power wash, paint, hardwood floor finishing). we’re figuring 20K tops to make it virtually turn key.

  1. Comps-- should we use strictly recent sales? (1-4 months, .5-1.0 miles)

  2. should we stick to the 70% formula (bank owned prop just listed in Dec. 2007)

  3. how accurate are the Zillow comps? some have similar square footage but sold for $500K in last 2 mos. less than a mile away

  4. how is it dealing with Fannie Mae on REO’s?

any feedback is appreciated

2

Comps: definitely use recent sales. 4 months is good.
70% formula is a good one, my only this is to make sure your comps are accurate and you allow yourself some wiggle room, especially in this market.
Zillow: Never used it, I use realtors. They bring you the most accurate and most recent comps in my opinion.
Fannie Mae: Haven’t done it so I’m not sure.

My two cents, I’m sure you will have plenty more opinions to choose from.

3

My two cents:

I’m the ulitmate optimist but I don’t think I would fix and sell anything right now unless I could carry that debt for maybe a year, or rent it out whichever, lease option I suppose would work too.

Also, I wouldn’t expect anything to be easy with Fannie. They, like every other federal agency, suffer from what I call bureaucratic inertia.

I’m not a house flipper, I fix up and rent so I could be overstepping my boundaries here, but I wish you luck.

4
1. Comps-- should we use strictly recent sales? (1-4 months, .5-1.0 miles)

No I would also knock on their doors and ask what concessions they received from the seller and then I would knock on 3 doors of actives and ask what their concessions will be. This will tell you a lot… Also understand how to evaluate location, view, lot size and other obsolescence.

2. should we stick to the 70% formula (bank owned prop just listed in Dec. 2007)

I wouldnt touch it for only 70%

3. how accurate are the Zillow comps? some have similar square footage but sold for $500K in last 2 mos. less than a mile away
If you knock on those 6 doors you wont need comps... besides comps on a declining market are trouble.

Good Luck

Michael Quarles