Originally posted by @Account Closed:
Originally posted by @John Baker:
I found an elderly man who says he needs to sell his property for cash to pay his mother's mortgages. The after repaired value (ARV) is 53,000. And 70 perecnt of that is 37,100. I think it might need 5K or 6K repairs. And I want to make at least 2K wholesaling this property. He wants 36K, but my maximum allowable offer is 35,100, which assumes no repairs. You think I can negotiate lower if he is truly motivated? If I can get it down to 29,100 do you think I should do the deal?
Hey John,
Have you pulled recent sale comps that give a likely valuation of this at 53k?
My other question would be, are you confident in your repair estimations, and if not, have you had a GC come and give you an accurate estimate? On a relatively low priced property, your margin for error is a lot smaller, and an unanticipated repair expense could tank your chances of success.
Obviously, you can't offer the $35,100, because there will more than likely be repairs needed. If you could get the purchase price to within 65-70% of your estimated ARV, and still manage to fit your $2k profit margin into that purchase figure, then I would say go for it. However, I would negotiate well below $29,100 because you not only have to allow room for YOU to make a profit, but also for your purchaser to make a profit as well.
Hey, thanks for responding Alexander. I found properties within 1 mile that have sold in the last 90 days. They are within 10-15% of the square footage of the house I am interested in. However, there isn't any info about square footage on one of the houses or the number of bedrooms, but it looks to be the same size as the house I am interested in on google maps. One sold for 62,000, 2bd, 1ba, 883sqft. Another sold for 55,000, 3bd, 1ba, 801sqft, and its in good condition but not excellent. And the last one, which doesn't have any data on sqft or the number of bedrooms and baths, sold for 40,000 and I don't know what condition it was in, and I can't find the information on the county website. I have access to the MLS and couldn't find any comparables sold within the last 90 days with the same square footage. So, I estimated about 53,000 for the house if it's fully repaired based on the zillow comps.
Also, I haven't seen the property yet, but if he is really motivated and willing to drop the price to, maybe, 23,000, then I will go see it.
