Vetting Potential Seller By Phone

[Brandon G.]

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? 

[Jerry Puckett]

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