Offer seems low.

General Real Estate Investing
1

There is a house currently listed on MLS. It has been on the market for 10 days. The asking price is $77,900. The remarks on MLS list it as a foreclosure that needs TLC. The tax value is listed at $95,000. I have not had a chance to go by and take a look at it yet, so I don’t have an accurate estimate of the needed repairs. Just to run some numbers, I am using $10,000 as the amount for repairs. The house across the street is very comparable and sold for $90,500 in July after 15 days on the market.

So the numbers look like this:

$90,500 ARV

  • $10,000 Rehab costs (estimate – haven’t looked at house yet.)
  • $1,000 closing costs (business loan – supposed to be low in closing costs)
  • $6,332 holding costs (6 months – hopefully not that long)
  • $5,430 sales costs
  • $1,000 contingency (repairs * 10%)
  • $10,000 expected profit

$56,738 Max offer

That offer seems low compared to the asking price. Am I missing something? Do offers like that really get accepted?

Thanks.
Bill M.

2

what you really need to know is how much his loan (which is foreclosing) is for. Chance are its for more than $56k, but you never know.

3

How would I find out how much the loan was foreclosed for?

Thanks.

4

That is a common misconception in this industry the bank will want fair market value regardless of what was owed on the property. So if they make money on 1 they loose money on 100 the goal is to get to a break even point or as close to break even as they can.

You can find out the price though by calling the Public trustee and/or whoever it is that handles the foreclosure process in your area!