This is a motivated seller. She needs to be out within the next 7 weeks. House is worth about $415,000 FMV - Repairs $20,000 = $395,000
After Repairs estimated worth range $ 450,000-485,000
What would be a solid offer to make where its not an insult to the owner?
Thanks for the advice,
Dlites
you should try to find out dom or day on market for sold houses with this being a high value if they sit on the market for 9 months you need to figure in the caring cost which in turn will also determin a part of your offer
Sorry, I forgot to mention I already have a potential buyer. So I wouldnt be holding onto the property.
My question is whats the rule of thumb or generic formula for how much of a percentage to get into the property for?
well how sure are you of this potential buyer because if your sure they are buying this are you doing the repairs or are they if they are is it someone that is going to buy as a personal residence or is it an investor?
Good questions whitewater. when you are handling the repairs yourself - not you, but a contractor - you should expect to make more on the deal than for assigning a contract. That said, my rule is 60% of the after repair value minus the cost of repairs. If my exit strategy is to flip the contract and let someone else do the rehab, I find that most rehabbers will pay 70% - 75% of the ARV minus the cost of repairs, so my profit is in the gap. If you stick to this formula, you just about can’t lose. This is a rule my mentor taught to me. A couple of other comments… Be sure you are basing your property values of the actual sold price of properties in that specific neighborhood, not the property’s appraised value. Definitely consider your days on market; even serious buyers can fall through. Finally, although you should always be considerate of others, you are in business to make money and cannot be too embarassed to do so. This lady needs help, if you can help her do so, if not walk away, but you won’t help anyone by paying too much for a property for sentimental reasons and taking yourself out of business!!! Most people are not insulted by an offer, but if you are insulting their house, pointing out flaws, etc. trying to talk them down, they will definitely get offended. Just make a professional offer and comment about what a nice house it is and you’ll be fine. Beisdes, what’s the worse that can happen? Chances are pretty good she won’t kill you… You’re not an investor until you’ve had a few doors slammed in your face!!! Happy hunting and God bless!!!
Sometimes it is helpful to talk to the owner- just ask questions about her situation. How much does she owe on the house? If she owes too much, then suggest short sale and then negotiate with the bank. How much does she know about the value of the house? I’ve come across a few homeowners that underestimated the value of their house.
Good luck!