Losing deals because I offer too low!

[Charlie John]

I recently checked in on a deal that I lost in December because I offered too low for the seller to accept at $22,500. It was a smaller home around 1050 sq ft, 2 bed 1 bath. Potentially 3 bedrooms due to funky floor plan of entering bedroom to enter the next bedroom. The homeowner called me off a direct mail piece I sent to her on her house in another city! She wanted me to buy her sisters house that her family finally inherited and just finished cleaning out. They were ready to sell it to finalize the estate. Her sister had passed a year prior. 

I had a rehab budget in mind of 45k and an ARV of 120k. It was out of my territory (even though it was in a dense metro area - the hood) so I wanted to have a larger spread to mitigate that risk or give me a margin if I decided to wholesale it.

Well - here are the results as I just looked up the address to see what happened with that house..

Sold in 22 days for 149,500. After looking at the pictures, the investor who bought it probably spent no more than 15-20k. Fresh paint, refinish floors, new appliances, and bathroom. The investor bought it for 44k from the lady that called me. 

If I do the math, that is 149,500 - 44k = 105.5k minus the 20k in repairs = 85k gross profit. All in three months time!

Not proud to share this but I hope this can be a learning lesson for someone else because it absolutely is for me!!!

I remember asking the sellers before I gave them the offer what they would like to walk away with on the house. They said they had no idea because they didn't know what it was worth. It was more-so my duty to tell them since I am the real estate professional. Well, when I heard back from her about not accepting my offer of 22.5k, I asked her What price did you have in mind. She then willing said 40-50k. Next time, I won't give an offer without getting a number from the seller first.