i am coming across a lot of properties where i am being overbid for a house. i work the numbers, but it seems like i keep underbidding and losing out on a property. it is getting really frustrating. i been tracking this one property for almost a month. it needed 50k in work. the comps based on sales was 120k. the asking was 65k. now i was always told to take a percentage of the comps (50% or 60% or so on) and then subtract the cost of repair. well on this one property that meant i would be bidding 22k btw none of my buyers would buy it over 40k. however, a pending bid was submitted for 64k. which is actually $.55 on the dollar. how come i missed it? should i not be concerned with cost of repair if flipping? what do you do when your bids are rejected or countered nowhere near your bid?
I would say eat it and keep looking. You have to consider the cost of repair. Using a formula I found on this site:
After Repaired Value x 70% - repair costs - holding costs - closing/selling costs = offer. It can be hard to find deals like this to pay cash out for. If the comps for the house are 120k less 50k for repairs, that leaves 70k. If someone offered 65k, where is the profit? Thats not even including the extra costs. Something you may want to look into, which is what Im studying currently are options. I’ve come acrossed more people willing to work with options than people who will accept 55k for a house worth 100.
Or find deals no one else knows about…
If you’re the only one bidding, it’s hard to lose to a higher bidder…