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Updated about 7 years ago on . Most recent reply
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Wholesaling To Flipper: How To Make An Offer
Hi BP,
I am scrambling right now to make the right offer in the right way by tomorrow noon. I am in the nor cal market and the house has ARV 360 so I figure my max offer allowable is 360-(55k repairs)-(my 10k wholesale fee)-(60k for holding costs and flipper profit) = MOA of 235k
I figure my intitial offer should be around 215k.
What do you guys think? Even if you dont know the market some advice would be better than none and guesstimates are better than nothing. Is this too low for a seller to accept or too high for a flipper to think it is a good deal?
My negotiation strategy is give them my 215k lowball offer and then if they object ask how close they can come to that number? Then to whatever they say I will reply with "is that the best you can do?". then to whatever they say I reply "So if I pay you all cash and can close quickly how much lower can you go?"
Then I figure if they arent anywhere near 235 by that point I say "I want to put this money in your pocket but it has to work for both of us. How much lower can you go? I'll have to get on the phone with my partner because we set a certain number I could not go higher than."
If you can help with any aspect of this problem please feel free.
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cody lets just do simple math. of how a flipper would look at this deal.
ARV 350k Minus 10% for selling costs which includes the realtor fee tax's insurance utls etc while holding it.
now most flippers ( myself included) are going to borrow money some where so lets be generous and say 2 points and 10% plus closing costs.. so lets say they borrow 200k for a round number that 4k in points 10k in interest so that's 14k for financing lets just say 15k.
Now lets say your SOW is 55 in your mind lets say in reality its probably 65k.
So we have 65k rehab your fee of 10k 35k resale cost and 15k holding costs. about 125k to get it done.
350 - 125 = 225k and most folks are going to want to make 15% on gross so right at 55k HOPEFULLY although now a days you might find someone that would take a swing at this for 25 to 30k but most won't. 225k - 55k and the flipper will want to pay 170k ish for it...
- Jay Hinrichs
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