Turnkey Properties

[Jeremy Ferguson]

I think this would be referred to as a turnkey property but please correct me if I am wrong.

Have any of you come across motivated sellers that live in nice homes that need little to no repairs. I get that most homes need something but to be honest I have come across a woman that has lost her husband and is looking to down size into a condo which she has already picked out downtown.

She isn't in a huge rush but she says she wants a simple process and doesn't want to deal with a realtor.

Whether or not this opportunity pans out I am curious what you have all come across. This would only make sense for the seller up to a certain point. Selling at a 6% discount would allow her to speed up the process of selling her home at the cost of realtor fees. But beyond 6% I really cant think of any reason why she or any other seller would want to sell at a discount when the house can literally be placed on the market the next day for retail.

This home is in a fantastic neighborhood on a golf course and is well kept up in great condition, updated appliances and only about 9 years old.

[Will Barnard]

I would need to know the estimated current value or the estimated ARV to properly advise you.

What I can say is that it is best to work backwards and rather than focus on offer price, focus on what the seller nets. In other words, if the ARV is $200k and repairs are $20k, rather than stating my offer is $120k (75% of ARV less repairs), it is better to show the seller the current value before repairs and what they would net after costs. So if the current value is $170k, I would show that the costs to sell will be around 10% or $17,000 making the seller net $153k. So if you were to offer that amount, you would be paying full price. Then I would point out that area market averages of homes that sell compared to the list price. I believe the national average is that homes sell for 95% of the list price, so another 5% off of $170k is $8,500. Then I would point out that it is typical for buyers to ask for repairs after inspection and that the costs of holding and the time associated with listing, making repairs, etc is worth money. Place a figure on that and all of a sudden, you are down to the $130's k range. Lastly, you point out that for the convenience and the fact that you are in this business to turn a profit, a small discount is necessary to pay your expenses and cover your desired profit. Now you are down to the needed $120k level which makes this example a deal.