Contractor · Garland, TX · Member since 2014 · 186 posts · 9 votes
I read @Jerry Puckett 's script that was posted and it's really a big help! When asking them what they think their house is worth and how much repairs it requires and how little they would accept, and how much they owe, what are some good rules of thumb to determine if they qualify for a face to face meeting?
So if based on the conversation, we believe the house can sell for $150,000 and I want about $20,000 on the deal, what is the most they should owe on the mortgage before we move to the next step?
Hey @Brandon G. , again, that's a pretty general question, so l'll answer with pretty general numbers. Let's say this is a 2000 sqft house needing a moderate rehab. (all of you full time rehabbers out there can skin me, but I just want to plug in some numbers to illustrate the principle)
So let's say you estimate your repairs at 15/square foot. That's 30k + contingency, so say 35k. Then your 20k (hopefully) profit. Buying and selling closings, 5k, Commissions on sale 9k, 4 months holding costs (that has many more "ifs" depending on how you bought, so you figure this one in yourself)
So 69k+ We could say 75k to ere on the side of the conservative. 150k - 75k = 75k. Your seller would need to have at least that much in it or be willing to pay you to buy your house.
Of course that good ole' rule of thumb usually works too: 70% less repairs: 150k x 70% = 105k - 30k = 75k
Hey @Brandon G. , again, that's a pretty general question, so l'll answer with pretty general numbers. Let's say this is a 2000 sqft house needing a moderate rehab. (all of you full time rehabbers out there can skin me, but I just want to plug in some numbers to illustrate the principle)
So let's say you estimate your repairs at 15/square foot. That's 30k + contingency, so say 35k. Then your 20k (hopefully) profit. Buying and selling closings, 5k, Commissions on sale 9k, 4 months holding costs (that has many more "ifs" depending on how you bought, so you figure this one in yourself)
So 69k+ We could say 75k to ere on the side of the conservative. 150k - 75k = 75k. Your seller would need to have at least that much in it or be willing to pay you to buy your house.
Of course that good ole' rule of thumb usually works too: 70% less repairs: 150k x 70% = 105k - 30k = 75k
@Jerry Puckett Thanks for the detailed reply. So during the phone questionnaire, if they say they have a 2000 sq ft house, you figure $15 as the preliminary per square foot repair estimate when vetting?
In your script, you ask them how much they think it would cost to get their interior and exterior up to a 10. Do their estimates figure into your analysis at all when vetting, or is that just prepping them mentally for the lower offer?
Now let's say if the seller says it will only take $10K to fix the home are you going to accept those numbers and most sellers same as investors don't know the repair cost until someone goes out and looks at the home. The best thing is go and meets the seller in person and take license GC with you to give an estimate what the repair cost is and has the GC be honest in the repair cost because the seller might say to let's see what my GC will charge.
@Account Closed Thanks for the reply. I know for sure before committing to purchase that a thorough inspection is necessary, but what I'm hoping to find out is how @Jerry Puckett and others use questionnaires to weed out over the phone the sellers whose properties aren't worth inspecting.
As @Joe Gore said, you can't really trust the homeowner for repair costs. They never know, and almost 100% of the time they will overvalue their house. I would say that the point of the phone call is mostly to see how motivated they are, you already know the area so you can quickly find if their city/town/neighborhood is desirable. At the end of the day, a deal is a deal, the price and/or terms you can get it for matters most. You definitely need to see the house for repairs, you can only vet so much over the phone. Stick to figuring out motivation on the phone, cause at the end of the day, all you need is a motivated seller :)
@Account Closed I'm a complete newbie and so I know you are much more experienced than me, but if a person has a house in an area where houses are worth about $150,000 but they owe $145,000 on their mortgage, wouldn't it be safe to say that we know this property isn't worth taking a look at unless we're looking to short sale? Would you go have a meeting with this person to do your due diligence?
To be clear, I'm not asking how to value homes over the phone. The purpose of my question is to find out how Jerry weeds out houses which likely are a waste of time. It was my understanding from his podcast that he does indeed do that, unless I missed something.
@Hasan Hamdan Thanks for clarifying. I must have misunderstood because I thought @Jerry Puckett was using some of the questions to weed out properties which clearly couldn't be a deal.