First Whosesale Deal: Are my numbers right for my offer?

[Account Closed]

I have a motivated seller in Maryland who is looking at possible foreclosure. I base my numbers on: (ARV x .65) - repairs = Max Offer. In this case: (285K x .65)-15K= (185K) - 15K = 170K max offer. Her mortgage bal = 75K. I am being told these numbers work everytime. However, I know my seller will want to know why my offer is so much lower than 285K? She knows repairs would be around 15K-20K. 1.)Does my max offer sound right? 2.)Which is a better exit strategy: subject to or assignment. She's abt 3 mos behind (abt $6500 due Nov 1st) she's getting FC notices.

[Troy Fisher]

Originally posted by Elizabeth S.:

I have a motivated seller in Maryland who is looking at possible foreclosure. I base my numbers on: (ARV x .65) - repairs = Max Offer. In this case: (285K x .65)-15K= (185K) - 15K = 170K max offer. Her mortgage bal = 75K. I am being told these numbers work everytime. However, I know my seller will want to know why my offer is so much lower than 285K? She knows repairs would be around 15K-20K. 1.)Does my max offer sound right? 2.)Which is a better exit strategy: subject to or assignment. She's abt 3 mos behind (abt $6500 due Nov 1st) she's getting FC notices.

@Account Closed , why would a buyer take that much? If her Mortgage balance is 75k, she's walking away with 95k, with a fast close (15-30 days), she doesn't have to pay 6% to a realtor, she doesn't have to do 25k in repairs, and she doesn't have to wait 3 months, and be 3 more months behind which would put her out another 6500.

Let's look at those numbers 285k -6% -Closing Costs -Repairs -Holding Costs

So: 285k - 17,100 = 267,900. (6% Agents Cut)

267,900 - 5,000 = 262,900. ($5000 for closing costs, Title, Taxes, Ins)

262,900 - (25,000 + 2300) = 235,600 repairs and an additional month of holding costs.

235,600 - (6,500 + 6,500) holding costs for being on the market for 90days, and paying back the 6,500 she still owes

222,600. Is what she'd actually get at closing minus her 75k leaves her with 147,600. Instead of 100k.

Now, don't explain to her that. $$ amount but the process. Plus if she's 3 months behind on her mortgage payments, she probably doesn't have the 25k for repairs.

Quick and easy response to the seller. "Ma'am, I have to offer this lower amount because of the amount of work and expense there is in flipping a property. I am offering you a quick close. I am offering you a way out from foreclosure. I am offering you a chance to start a new, fresh chapter of today, instead of hoping to do it in 3-4 months."

YMMV