Is this a Deal?

[Gregory Hildebrandt]

Here are the numbers: Home built 1959,1465 sf 3,2,1, office area could be 4th Br. Outdoor vinyl siding 4 yrs. old, Needs carpet except Br's roof approx. 15yr old. So basically just cosmetic fix. Asking for 45,000. Arv, around 90,000. Repairs estimate 5-$ 7500. I have not been out to see the house as of yet so could be more. Based on this information what would you offer on this house? I will add and subtract once I have inspected the property, but based on this information is it worth my time. I have not determined as of yet what motivation is and will determine when I meet with the seller. Please advise.

[Robert Leonard]

I wouldn't offer anything yet. You haven't mentioned recent sold comps. Where did the ARV number come from? Nobody's opinion matters on the ARV - the facts matter. That's what an appraiser will use to determine what value to place on the property for a lender to offer financing to a retail buyer to purchase the property.

When you have a clear idea of what the ARV really is, you work backwards from there. What are the estimated repairs? How much will your holding costs (carrying costs) be for the time it takes to do the repairs? Will you list the property on the MLS and have to pay commissions? Did you leave an allowance for the unexpected? After those things, how much do you want to leave as a profit margin? That's how you boil down to your offer. Which shouldn't be your first offer - you should leave room for negotiation.