This REO seem reasonable?

[Erik Larson]

My RE agent (who is an REO agent for 2 banks) came with this: $130k 3bd 2 bath Vacant for about 1 month all windows busted, needs a full gut and start over he said $35k in work Says He could sell it for $190 to $197k Area of town isn't great, nothing in Zillow in 1 mile sold for over $190, on on the market for 45 days at $190. And he hasn't provided comps for it to me yet. He said I would need to tile the house, new kitchen, glass back splash etc. Which is pretty much what the one house at $190 has minus the kitchen backsplash. 70% rule rules this out right quick, but I'm being told (by him anyway) that this is how our market is in PHX. 70% would put me about $90k. Is it common to offer that far below ask for an REO? Or just a deal I should pass on and make note of for learning.

[Ralph R.]

@Erik Larson

Soooooooo the big question is are you wanting to do this flip to make a profit or are you wanting to do it cos your realtor wants you too?  I would never take a realtors word on a re-hab cost, especially when a kitchen is involved.  secondly I wouldn't take somebody who tells me something is an absoloute "that's the way it is in PHX" especially when they stand to make more than you will.  add 2 closings one as a buyer and one as a seller and you wont have anything left.  He stands to meke 2 commissions one when you buy and one when you sell.  You stand to take all the risk and he stands to make all the gain.  this house at that price wont work IMHO.  My advice?  pass on the house and find a new realtor. watch the house and see what it finally sells for if you want.  that will tell you if you did right or not, and cheaper too!

RR