All Forum Posts by: Phil M.

sounds awesome!

how accurate are zillows 'recently sold' homes? are the prices and dates correct at all? im having trouble verifying if i can use these as comparables..

Originally posted by jawsette:

Please, please, please do not try to use any figure from 05 as a basic for anything!!!!!!!!!!!!!!!!! Values have come down 25-50% since then in most areas!!! Therefore your figure of 365K may now be as low as 186K and not your supposed low of 220K. Comps or appraisals should be no more than 6 months old, not 5 years!!!!!!

I know this, just putting it out there..most recently sold comparables have sold for 300+ in the area..so my assumed 220K ARV is conservative.

The numbers I put up are mostly just for example. The reo I used as an example will probably be worth more than 220k ARV, and is also at a lower asking price. Just trying to get a rough estimate of my numbers, and I do understand the 70% rule. This topic was mainly for the ARV, which is obviously a need to know thing in REI. I mean, I supposed in worst case scenerio the home would be worth $220k, but more than likely is worth more than that comparably and from past sales (sold for $365k in 05).

But again, ARV is need to know, and once I know that I can figure which will be a good deal and what I can offer, and therefore is really the last step I'm going to take before I actually go through with making offers, and finally (hopefully) starting up my investment business.

Originally posted by G. F.:

How are you financing the property and what is your exit strategy?

You many need to double your closing cost.

I plan on financing through a private lender who will be actively overseeing the investment, who also owns a construction company that we may be able to utilize. The exit strategy is fix and flip, and if we need to hold for a bit we may rent month to month.

Okay..I've come to a point where I believe I've definitley found some good deals, and I'm about to make offers on them.
But before I do, I need to be positive on the most important aspect of a supposed "deal": knowing the After Repair Value of a home. I feel this is the most important aspect because If I get a deal for a home for even $500.00, If the ARV Isn't significantly more than that price, than it isn't really a good deal at all! So, obviously, this is key. In fact, from what I can understand, the most important thing about fixing and flipping.

That being said, I need to know the ARV for me to make offers on REO homes. Why? Because I need to Calculate what I can offer on the home for it to be profitable. For example:

Asking Price of REO: $200,000 (Irrelevant)

After Repair Value: $220,000
Closing Cost: - $10,000
Holding Cost: - $4,000
Misc. Expenses: - $3,000
Repair Cost: - $23,000
Profit: - $24,000
Max offer price: $156,000

As you can see, the ARV, is the defining factor in what I can offer, not anything else. That being said, and seeing how important it is, what's the best way to positively know what you can see the home for after you repair it?
I've looked at similar sales prices, and sales price of the home in the last few years, and what the county has in their records for the home market value (for taxable purposes), but nothing is perfect, and I need a written in stone value for me to be confident that I'm going to fix up a house that will be worth a certain amount of money, and not all of a sudden the home being worth say, $24,000 less than I thought the after repair value would be.

- So whats the best way to know the ARV?

- How accurate/expensive are BPO?

- Will the appraisal after my offer is accepted give me both as is values and after repair values?

- Is the ARV the exact same thing as the market or retail value of the home, and how much will the quality of repairs/upgrades (no serious remodeling of the home, just keeping it simple) dictate the ARV?

I noticed that a good portion of closing costs come from the lender (a credit union or other institution). Application fee, credit check, lender's attorney fee, all come from the lender. That being said, if I have a private lender do I forgo these costs? And can it significantly reduce overall closing costs?

I see a lot of cons to having a buyers agent in the Anyone use a Buyers Agent to offer on REO's? topic. A lot of the cons include:

- Having a buyer's agent, the listing agent may submit your offers to the seller last
- The Listing Agent may not submit your offers to the seller (bank) at all
- Perhaps it makes your offers less attractive to the Listing Agent
- The Listing Agent may give preferential treatment to potential buyers without buyers agents

For REO, do the pros really outweigh the cons in having a buyer agent? Is it a definite necessity for an inexperienced investor?

Question:

If the Buyers Agent ultimately costs the home buyer nothing, why arn't most home buyers using one?

Originally posted by Jon Holdman:

If you're using a private lender, you're not paying cash. You'll need to put in a financing contingency in case your lender flakes out. You will need a pre-approval letter from the lender.

Okay, I could include a pre-approval letter from the private lender, but will the bank take that as proof of funds? I ask because our lender is just a man, not an institution..

Originally posted by Eddie Ziv:

One thing I notice lately is that investors are dropping contingency requirements such as inspection. Couple of my investors lost bids to offers with no contingencies...

Well without a contingency than how can I protect myself from losing earnest money or being contractually obligated? Should I include just a financial contingency and forgo the inspection contingency?



A few more questions I have about Buyers Agents include:


1. How much do buyers agents typically charge for their services?

2. How do I go about finding a buyers agent? Are they the same as a listing agent just on the other side of the table? Are there any websites recommended to find them in my region or is there a way to find through BP (Didn't find any through BP search for Staten Island, NY)?

3. Are there any questions I should ask the buyers agent or certain details about the agent I should inspect beforehand to help verify if he/she is competent in helping me achieve my real estate goals?