Making offers

[Carrie Giordano]

Hello! I would love some advice on a potential flip. This would be my first flip although I have two but & holds in the area.

The house is a foreclosure that went on the market 11/2014 for $120k, a month later it dropped to $100k and then in January dropped to $70k. Since then it has gone pending twice and just went back on the market this week. I found out that the home has an issue with the well water. Worst case scenerio is needing a new well for $8k best case is $1k in repairs. 

The house is in Ohio where I'm from so I have not yet seen it but have someone looking at it for me on Friday. It looks in good condition from photos, it was remodeling in 2002 though so it needs some updating. Comps in the area run anywhere from $110k-$150k. If I couldn't sell I'm looking at about $1100-1200 month in rent. 

My first question would be does this sound like a potentially good deal? I feel like if I could get it around $55k it follows the 70% rule. 

My second question is about making offers. I kind of feel like I might as well make a low offer of $50k because what could it really hurt. My agent said I might not want to make too low of an offer and end up in a multiple offer situation rising up the price. Is this just my agent trying to make a higher commission of not wanting to write so many offers? 

Would love your thoughts! 

[John Ching]

Carrie,

You threw me for a moment at first when I saw that you were in MDR and you were talking about home prices in the $100K-range...Then, you mention the house was in Ohio! LOL...sorry, I digress...

I'm from So Cal but flipping here in Missouri. We are having the same issues as you are - RE Agents don't want to submit our bids because they are so low. 

I say screw'em! It's YOUR MONEY. Make offers based on what your calculations show is a good offer. I've had several mentors who said, "if you don't blush when making your first offer, you offered TOO MUCH!". It's advice I've taken to heart. 

Tell that agent you'll start writing your own offers if he/she is too lazy to do it. A low offer will only draw a bidding war if there is another buyer. Have your money lined up and be the strongest offer.

Remind your agent that you will be rehabbing the property and re-listing it within a certain time frame (we shoot for 30-60 days for most flips), so they have the potential of getting another listing without having to work for it...at a higher price!