Deciding On What To Offer

What is the FMV?

Don M!

Zillow says $122K.. but I am reducing it by $10,000 since I was told Zillow is often on the higher end

Are you buying this for yourself or for another buyer?

What are your buyer's requirements?

How much would you think the repairs would cost?

Some investors may require that they (the investor) put at most 50%-70% of ARV into the project (Acquisition, repairs, your fee, etc).

Investors would want a steeper discount than just 10%. If an investor has found a lender that would lend up to 75% of ARV, then the investor would have to come up with the difference.

Ok that sounds and looks good.

Don M!

Are you buying it? Or are you doing an assignment of contract??

Are you buying this for yourself or for another buyer?

No, I would be wholesaling this to another end-buyer.

What are your buyer's requirements?

It varies by the Investor.. On average, They want 30-50 ARV..

How much would you think the repairs would cost?

Thats where I am a little "stumped".. All the plumbing, electrical is okay and up to date. There is a small leak in the kitchen ceiling that I was told they are fixing.. I walked through the entire house, and in my opinion, a little updating is all.. The kitchen could use a new floor (its currently vinyl)..cabinets are not horrible..they are oak..newer style..

Some investors may require that they (the investor) put at most 50%-70% of ARV into the project (Acquisition, repairs, your fee, etc).

So, do you mean Investor would pay .30- 50 on the dollar as a rule of thumb?

I would be assigning it..

What I meant by the 10K is that, instead of ARV being $122K as Zillow states, I would subtract $10k from that and say the ARV is $112K. and then work my discount from that..meaning, my commission, estimated repairs/updates. I was actully thinking of offering the seller about $58K for the house and flipping it for $63K.. giving the endbuyer a $49K (that would have to include his profit too, after repairs, holding costs..etc) I just want to make sure that would be reasonable enough for the end-buyer..

You are right. Good Job!!

if the house is worth about 120k.
Buyer wants to have 50% ARV. 120k x 50% = 60k max investment for the end buyer.

60k - repairs - your fee = Maximum Allowable Offer (MAO).

So you'd want to offer less than the MAO in case there's any counteroffers.

is often way off with reality. Try checking recent comps in the area to help determine your FMV. Then take 35% off of that number. Then subtract all of your repairs. This is what all investors will be looking at. Make sure all your numbers are spot on and the property is in a desirable area!

Hope this helps,
Ryan

I was told that it's recommended that your fee should be 10% of whatever amount the end buyer should get. If the end buyer gets 30k, it should be viewed by the end buyer that a fee of 3k isn't bad or too greedy.

Actually in my neighborhood in Fort Lauderdale I found that Zillow is on the low end lately. They don't keep up with the changes as quickly as they think they do.

I think they tend to average the prices with the closest neighborhoods that might not be as desirable. Check your county's property appraiser site for recent comps
sold.

jjenre@****

http://www.deangraziosi.com/real-estate-forums/everything-else/87822/my-...

most say 35% of fmv, minus repairs,minus your fee

Thank you all.. Wish me luck.. My first deal!!!!

Holly,
you should not use Zillow as your foundation for your FMV; get some recent comps (sold last 30-90 days, within a mile, same sq ft, # bed, # bath) from your agent. Get the average from those comps, multiply by 65%; then you need to deduct closing costs, holding costs, repairs, and your fee. That would give you a max offer if you intend to wholesale the property.

Wishing you success,
Valerie

Hi Holly,

Here is what I have learned from studying Deans latest book "30 Days to RE Cash," and the RBBP about calculating FMV.

1. Run comps (sold within 60-90 days)in the neighborhood, somebody (I forget who already elaborated this point) but get 6-8 with sq.ft within 20% of your target house and make sure the # of bedrooms matches (not so important to have exact baths but make sure the bedrooms match);

2. Calculate your Price per square foot (PSF) for each comp house by dividing the sales price of the house by the square footage of that house;

3. Calculate the PSF for your target house (so if its 8 comps then add up all 8 PSF's) and then divide the total by 8 to get your target house PSF;

4. Then multiply your target PSF # by the square footage of your target house to get an FMV figure.

Now you can proceed to calculate your offer price by first discounting:
1. Your investors equity (say 30-40%);
2. Your Closing costs (say 15%);
3. Repair costs (say $10-$15K, I will just assume you put in a new kitchen and new carpet elsewhere)
3. Your profit (10% sounds good, if its a really good deal maybe even more)

Voi la

Hope I helped clarify. Good Luck and Go get em Holly