Question on my first deal

I asked about my offer price, repairs, and my profit, this would be if I fix and flip.
Otherwise, if I offer $64 and want to assign, and they do the repairs, but do I need to give them the estimates I have? Or just add to the $64 what I want for assignment fee.
Sorry didn't put that the right way when I wrote it.
Sandi

This is how you present your offer.
I assume the $128,000 is backed up by sold (no more than 90 days old) and currently listed comps and that average DOM is 90 days or less. If DOM is 120 days that affects the value.

OK, So you advertise the ARV at $128,000 if this an ACCURATE real number.

You present it to your buyer like this:
ARV $128,000
Re hab costs $15,000 (put in your actual number, this is an example)
Buy it for $74,000 (you make $10,000 based on your offer price)

You buyer is getting the property at 70% Of ARV including repair cost. This number depends on your actual repair costs and true ARV. This deal should fly if your numbers are accurate.

You will have 2 contracts
1. Your contract with your seller for $64,000 purchase
2. Your assignment contract that shows you paid $64,000 and your fee is $10,000 for the total purchase price of $74,000. FULL DISCLOSURE

Good luck! You are taking action!!!
Michael Mangham
MD Home Acquisitions LLC

Michael, I know the Realtor ran COMPS and he did go back at least 90 days. I went on totalview and spent a lot of time on there and found a few houses sold over the summer for $102k up to $118K.
I checked out other sights and FMV on other homes are in the 120k, so thanks for the input. It will help with a counter offer. I don't think I will come up to $64, and tomorrow when I go through the home with a contractor, I will have more leverage with the brother.
Since the brother in AZ doesn't care, and the brother up here is fed up, I will stick close to my original offer.
I am not sure if the wheelchair access would be a positive or not. Could cost to remove things and replace the w/c shower access with a tub and shower.
Thanks, I will let you know what happens after tomorrow.
You have given me some good advice so far on other posts.
I need to have a deal go through now, because of my situation. But if this doesn't work, the experience was helpful.
Sandi

Both the Realtor and myself ran COMPS and nothing has sold since June. There really aren't many homes even for sale in the neighborhood when we drove the area. Actually didn't see any.
Assessments in that area run from $124-$135, FMV on this home is $128. All the homes in this area are small ranches and cape cods. The COMPS show from a few blocks away, $102-$118.
Had a contractor go with me today. Garage roof should be replaced. House would still be okay for a couple years. Est on the roof for both was $3700.
All bedrooms have hard wood floors. Living room is carpeted, but looks like hard wood under it.
Basement has toilet and shower, and a bar. Nothing more in the house, unless someone wanted to update with an outside door. Cupboards are Birch wood with walnut stain, but need cleaning and some restaining, but in very good shape. I think taxes were $2996.
I offerred 58k, they said 69k. I am going to counter offer tomorrow with $64. Is that a good idea if I want to assign it, or how do I come up with a number that will make another investor want this. This home also has wheelchair accessibility. Plus or minus!
Any ideas on numbers.
The owner told the Realtor to bring it down again to asking 70K they were asking 90k and before that 110k.
Any thoughts??
Thanks
Sandi

My thoughts are the market is sending you a clear message as to what this house will sell for. The thing is not selling for $90,000 if I read right. Its not worth more than $90,000 in the market TODAY right? I would go no higher than what you offered (already to high to assign to a fellow investor/rehabber type buyer.)Stick to your guns! If they say no, go on to the next and check on it in a couple of weeks and make the same offer.
Example: Buy it for 65% of $90,000 =$58,500 minus repairs $5,000 = $53,500 should have been your max offer.
You assign it for a $5,000 fee to your buyer, HE pays $58,500

OK, this is what your buyer (investor buyer)looks at:
Buy $58,500
Fix $5,000
Commissions $5,400
Closing costs $1800
Misc costs $2500
Total cost $73,200
List for quick sell at $85,000

Profit $11,800.

However you are already $4500 higher than this because of your $58,000 offer. You will have to sell it at $63,500 to make $5000.

Chances are if you what to sell you will have to do some updating. In today's market place to sell quickly you need to have the nicest house at THE CHEAPEST PRICE. This is a buyers market. YOU MUST BUY CHEAP!!

These numbers are by no means set in stone, just a guide line when doing assignments. You must get it cheap enough that it will work for your buyer if doing an assignment is your strategy.

Hope this helps!
Michael Mangham
MD Home Acquisitions LLC

with Michaels advice. Based on what you are saying about the market and prices - you need to get it low enough to add your assignment fee and still make it profitable. As far as the handicaped situation - like you say - it could limit your buyer pool to those who need that. I think you should be prepared to present your repair costs both with keeping the handicap access and also with removal of ramps etc. Its definitely something to keep in the picture when factoring things in. And like Mike said - if they wont take your offer - wait, watch, and go back in. TRUST THE NUMBERS - they dont lie!!! I wanted to make every house I saw my first deal so bad I could taste it lol, but kept walking until finally I found the right one!! So keep up the good work, and stay in the investor mindset!

Hi:
Comps are useless. The only thing you can rely on is an appraisal. An appraisal is more of an accurate tool to use.

Comps tell you what similar homes sold for. Lets say you have a property and three comps on it, one for $66,000, one for $69,000 and one for $75,000, this does not mean that the property you want to buy is worth anything near these.

If I am making an offer on a piece of property and I offer $95,000.00 and it is worth lets say $108,000.00, the day the property is sold, it has a market value of $95,000.00. Comps mean nothing more than what a property sold for.

A lender does not loan money based upon comps as a guage of value, they rely upon a appraisal.

You can take anyone's advice, your free to do that, but this is my two cents.

I had thought of asking about an appraisal. The house has only been on the market for about 60 days, and at 90k when they dropped it to that a couple weeks ago, they had an offer right away from a neighbor. But she couldn't get financing because of her divorce she was going through. They did get several calls. Mine was one of them. When I looked at the house, the brothers had just told the Realtor to drop it to 70k and they wanted to just get rid of the house.
So it is still listed at 90k because I did write up an offer right away.
The house is still full with the partents furniture, and the brothers hate each other.
But I did wonder if an appraisal is a good idea, and will talk with the Realtor tomorrow about that. I listed it on craigslist for $81k just to see what I would get, and did receive several inquiries. Location is great.
So appreciate your advice, and will check into that.
Thanks
Sandi

What if your house appraises for $100,000 but there are several houses just like yours that are currently listed at $80,000 and days on market was over 120 days? Also every appraisal I have seen has comparable properties as part of the appraisal. Maybe I am missing something? The current market determines current value I thought. I always look at what I can SELL the property for. Using your example I would say I could quick sell my property at $69,000 and that is what I would base my offer on. Unless there were several currently listed properties for $66,000 than I would base my offer starting at $66,000
I am sure not going to order an appraisal on 10 to 15 properties a week!! That's how many offers I make. So what other gauge of CURRENT market value would you use to base your offers on 15 properties a week other that sold and currently listed comps?

Interested in your response!
Michael Mangham
MD Home Acquisitions LLC

I will use all this info I read, and will run more numbers, then I will speak with the Realtor tomorrow. And will update my craigslist ad and see what happens.
Will call a couple investors I bird dog for and see if they are interested.
But do want to ask Michael, why is the buyer on your post, paying for the commission, I have sold 3 of my own homes overs the years, and the commission was taken out of our money. Or did I not understand that?
thanks again for everyones input, and I will let you know what happens.
Sandi

The buyer turns into the seller when he lists the property. So like you he pays the commissions. He must consider the commissions as part of his costs right? He buys it, fixes it, lists it and sells it! All the costs come out of his gross profit. Make sense? See why you must know what the costs will be for your buyer to buy, fix and sell when you make YOUR offer?

Don't offer any more on this property! Also it is not legal to advertise a property (hopefully it is just a ghost ad)for sale unless you have it under contract.

You are taking action and the learning curve is steep! GOOD FOR YOU!!!
Michael Mangham
MD Home Acquisitions LLC