I need some help on figuring out how to come up with my offer price on a house that needs no repairs.
For example, the house is appraised at 319,000.00. it does not need any repairs. I have seen the apprasial, though it is one year old. The amount still owed on the house is 241,000.00. The mortgage is $2089.00 a mo. and is current. The owners have said the min they would take would be 252,000.00.
I used a formula that one of the gurus has:
ARV-40,000.00 less repairs less profit = Top Offer
So using the appraisal numbers;
$319,000.00-40,000.00 = $279,000.00-$5000.00 = $274,000.00 Top Offer.
Does this sound about right to you or do I need to figure in something else. Since there are no repairs I didn’t deduct any. The $5000.00 is the wholesale fee. Is there any other fees that should come out of this formula?
What would you do differently with the above scenario? Or what is the best way to determine offer price on a house with no repairs?
Is this a feasable wholesale deal?
I am probably missing something here… why not just offer the owner 252,500. After CC that leaves them 3-4k . Seems fair to me, since they arent behind on the mortgage yet… It seems like your formula isnt gonna help you here… 67k gives you quite abit of room w/ no repairs…
Actually, I was thinking about offering them the lowest they would accept but I just wanted to make sure this would be a good deal to wholesale. Thanks for your input. I love this site, everyone is so helpful and you can learn a lot just by reading other posts.
I have an investor in the same area where the house is located and would assign the contract to him. I think pwrbrkr38 pretty much nailed it on the head. I’m new at this so I wasn’t sure to use the formula or since I already knew the lowest they would accept I could probably offer that. I appreciate your help and pwrbkr38 too.
no problem … i don’t know exactly what area you are in but in my area ( central FL ) the biggest mistake Iam seeing right now in this market is investors being off dramatically on their ARV and this is obviously causing a problem. ( they just went from a flipper to a landlord ) The markets are changing quickly so if you think the ARV is a particular number I would recomend shaving off anywhere between 7-10% and if your original value was correct all the better.
this is an easy one. call your investor friend and tell him you have a house worth $319k in good condition that you will let him steal it from you for $280k ;D
write a separate P&S contract with your investor, and do a double closing.
An appraisal from 2005 isn’t worth the paper it’s printed on.
Actually, most appraisals aren’t worth the paper they are printed on, even if they are a day old. Appraisals are generally done for one reason: to help someone get a loan.
Every time I’ve had an appraiser out to a house, they always ask one last question before they leave: “So, um…where were you thinking the number should be?” Or something to that effect…
Unless you know this market very well, keep one thing in mind: the seller knows more about the house and the market than you do. If they are willing to take “$X,” there is often a reason for that. Make sure you KNOW what the value of that house is before you think you’ve hit a home run.
Is this the seller’s personal residence or an investment property? If investment , can suggest capital gain considerations to induce seller to give a lower price.
I dont understand where people come up with these formulas for their offers–
ARV- 40k = Best offer?? or ARV *.75 = Best offer. Certainly every situation is different. The changing market is of course the biggest factor.
Why wouldnt you just go with:
ARV
Less: Estimated Holding Costs(How long will it take to sell in this market)
Less: Repairs
Less: Closing Costs
Less: the profit or wholesale you want
Equals: Your Best offer
ARV
Less: Estimated Holding Costs(How long will it take to sell in this market)
Less: Repairs
Less: Closing Costs
Less: the profit or wholesale you want Less: desired spread for your investor
Equals: Your Best offer