Second Offer

How did you calculate your offer? What are you planning to do with the property?

If you start at $137K, figure 4% closing costs ($5.5K), $25K in rehab, I threw in $3K for holding costs (probably low), your total costs would be $170.5K. That leaves $12.5K above costs. If you wanted to wholesale, there is probably not enough equity to take out your profit and attract an investor to buy. You may be able to rent if rental rates would exceed mortgage payments. You could flip, but you may need to add more holding expense for this market or lower your asking price (and profit) to sell quickly. You would also need to deduct closing costs and Realtor costs if you sell with an agent.

Al

Simply I took the fair market value in the area I have no intention on holding this property.

Fair market value: $183,000

Subtract my 10% commission $18,000 but Im not greedy $10,000

Subtract 6% Closing costs $11,000

Subtract Rehab costs $25,000

Total offer amount $137,000

They are asking $164,900

So if an investor buys the property for $147,000

Add rehab of $25,000

and lets say add $3,000 for holding totals $175,000

I figured high on rehab as well so there's a profit margin of about $30,000

Property's according to the comps in that area actually are high
b bt ac list sell Dom
Average 3.00 1.33 0.54 $197,033 $192,483 45

Thanks for the offer Bernie. Based on your situation it seems like a very fair and reasonable offer. As you know, I have two better offers in hand. I will keep yours should things fall through. I enjoyed showing you the property as well. You seem like a smart, energetic, young fellow who is going places.

I'm also going to be signing an exclusive contract with a real estate agent this week who've I referred to the site. I've also set myself to see another rehab property which is been on the market for a while and the price is great! Will have updates on that this week.

I still dont understand how in the WORLD you came up with a profit margin of $30,000?, unless you over estimated your repairs by approx. $20,000, then their is no where close to $30,000 profit according to your numbers, if i were looking at this property i would have offered much less, about $30,000 less, like Al said, no investor would take this property off your hands at those numbers, SULLY

p.s. Please dont think i'm being rude or anything, just trying to offer you my opinion on this "deal".

Hey Bernie...go back to them and tell them after doing some more figuring on repairs etc..you are going to have to offer $100K. All they can say is either yes or no.
I am offering people half of what they are asking and getting great responses.(thanks cbrpower)
One man has a property that appraises for $137K (2 months ago) and is asking $100K...I told him all I could give him (because of todays market) is $50K and that is before I have even set foot in the house. I told him it may be even less once I come out and look. That was just a tennative offer.

He told me to come on out and look. Today he asked me how fast I could close if I decided I wanted it for $50K.
People are taking cents on the dollar for their houses now. All you have to do is ask.
I did this same approach to several houses I found on Craigs List and everyone of them told me to come on out and see them.

Hey, Bernie. Great job on taking action!
Since the agent said he has 2 better offers and will "keep yours in mind", you are doing the right thing by moving on to the next. He'll be calling you if the others fall through. Then you can lower your offer if you want to.

About signing the exclusive contract with the other realtor...
Do you know FOR CERTAIN this is who you want to work with?
Al (or anyone), what are the rules with this? If you sign an exclusive contract, can you "fire" the agent if you need to or are you bound by the contract for the designated time? (Bernie, I'm asking this as much for myself. I hope you don't mind)

Rina

We call it a Buyer/Broker Agreement. It is intended to keep a buyer from going to another Agent. As an Investor, I would not sign it. (Don't tell my Broker I said that) I know many people have broken the contract, and I don't know of anyone who was taken to court. That does not mean it would not happen. It may be to your advantage to use the listing agent in a deal to get better consideration from a seller, and you would not want to be tied to one Agent. Also many Investors use more than one Agent to find them deals. If you find an absolutly "great" Agent to work with, and they will not work without an agreement, then you might want to consider it.

Hope this helps, Al

Thats good information to know. I know when I look at the properties I have to sign a disclosure from the agent saying that they work for the buyer and there job is to get the BEST price on the house, so hence why when I'll submit low baller offers they may not take.

I viewed the pictures/video. The property seem to have some potential. I believe it will need a lot of work, that's how it appear. The kitchen looks great. How is the market sales in this area? If you could get at least $10,000, that is more than nothing at all, especially if you had to put nothing down. All the Best in your deal.

Sandra

Well they got the full asking price which confuses the hell out of me because the place is a dump right now.