Real Estate Math

[Brian Stone]

What does all this mean to a wholesaler?

Asking Price: $30,000
Amount Owed: $5,000 (taxes)
Repairs: $10,000
After Repaired Value: $70,000
Max Offer: $32,000 ($42,000 (60%) – $10,000)

I pulled this off flippingjunkie, hope he doesn't mind. So, the owner is asking $30,000 for the house. He owes $5,000 on it. Sooo, what does that mean, does that mean that the owner is trying to make $25,000 on this sale?

Repairs, $10,000, I get that. That is how much it will cost to rehab the place for an investor.

Once the house if fixed up, the ARV will be $70,000, which I'm guessing an appraiser did, or is it just an estimate?

So, why is he making a max offer of $32,000? Is he taking the ARV x 60% - what he is charging? How does he know how much to charge? Is he just pulling a number out because that is what he wants to get paid or is he using a formula?

How did he come up with the number $10,000 for his assignment fee?

Thanks guys.