I thought that I would post this, to do a sanity check…
Bank owned house (not even cleaned up yet after the foreclosure)
Listed for 128,900. In neighboorhood (older tract homes, all on slabs, built in the 50s, all basically the same design) where homes are listed for between 145k and 165k. The average list/sale price of homes is 157k.
Now, there are about 9 listings in the sub. There is only one sold. the other 8 all popped on the market about 90 days ago. So, in short, there aren’t many “sold” comps, just listing averages.
The house is in tough shape, cosmetically. Structurally good.
Cost to remodel to an attractive, saleable condition would be 25k (+/- 5k).
150k sale price post-rehab (trying to be conservative).
25k (or so) in expenses
8.5k in interest payments (12 months of carrying costs)
2k in taxes
1.2k in insurance
4k in closing costs to acquire
4k in closing costs to sell
****not figuring a 6% selling commission quite yet.
I would really need 25k in profit upside to make it worth it to me.
To me, this means that either my offer needs to be about 80k, for the math to work, OR the rehab needs to cost less than 25k (I can shave money off this, or course, but my fear is that the house will be less attractive and saleable, in a neighborhood with many listings to compete with), OR I would have to be able to get more than 150k post-rehab (risky).
That is where my head is at, now here is the question:
Are there any experienced REO rehabbers out there who can offer an opinion as to whether the bank will consider my offer seriously?
I have done 3 other remodels (I am a GC), and one was bank-owned, but was an absolute wreck and sat on the market for a year with no offers. This one has only been on for 2 weeks.
Please don’t say “make your offer and see”, or words to that affect. I already know that much from my broker and my experience. I am looking for someone that can give me insite on how the bank will see it, and what my chances would be…
Since I have these estimates that justify my offer, as a legitmate business person, should I share these numbers with the offer that I submit? I don’t know if that would help (especially sharing my projected profit!). I mean, these people do this for a living, so would it really help to try and justify my offer or not?