Determining the wholesale offer on an REO

[Kathryn K.]

I was wondering how successful wholesalers, particularly in CA, are determining offers on bank owned fixers. The "70% of the repaired value minus repairs" formula seems to be not applicable in my market. The banks really are not just giving houses away. I'm about to make an offer on a typical starter shack in the Bay Area and using that formula and factoring in something for the wholesale fee brings the price down ridiculously low. So I guess my question is: Are you guys using that formula or something else?

[Brian Haskins]

There is no standard formula any more it will vary greatly to your area. I'm in St Louis I don’t go after reos but deal directly with homeowners in my area, people want to be at 60 or 65% instead of 70%. I know my buyers and if that’s what they are paying then i know i need to be less than that. Bottom line you need to know your buyers and then pay less than they will to create your spread. That's how you do it instead of worrying about formulas.

Brian Haskins