Telling yourself to drop out because its 120k is a way to "rationalize" leaving.

The CMA he attached showed:Price by sq ft - $146, 250 ( low $34,778, high $239,598)Price by FCV ration $96,866 ( low $46, 610, high $174,176)Part of the issue is it is occupied and so until the tenants are out, they are unsure of the inside condition (it's also why they may have had issues selling it on the MLS).I ran the numbers on the fix and flip calculator and came with the following:Resale Value $100,000Purchase closing costs -$2000RE Agt fees for sale -$6,000Sales closing costs -$3000Monthly holding costs - $3000 (assumes 6mo holding at $500 per month)Rehab -$5,000Desired Profit $20,000Offer Price $61,000He then basically dismissed me (obviously too low for him to offer).  

Again, that large of a cancellation fee is protection from slick owners - not rational investors.Good luck out there!  

I would just rationally explain it to them and give them a heads up to help them budget accordingly.

If you're not using any cash, then your cash on cash return is infinite.CCR is a very simple formula that has been "mangled" by investors looking for ways to rationalize bad deals by introducing elements into the formula that have nothing to do with cash.The formula is simple:  Cash (only) out/cash (only) in....in the 1st year ONLYIf I use an example of one of my deals I just did:Cash in:Buy/Rehab/Fees = $55kTOTAL                = $55kCash Out:Refi in 6 months     = $60kCash Flow 1st year = $ 4kTOTAL                    =$64kCCR = $64k/$55k = 116%

Make sure you also have a solid “Pro-Rations” Clause as well.

Yes you will need steady income, decent debt to income ration.

., the fact that you spend all that time rationalizing the situation to make yourself feel like the agents should give up money means that you KNOW that you just didn't execute well on this deal.

Buyers simply aren't behaving as rationally as they have in the past.

I can see the rational for showing a buffer, but also can see the other side, where the seller sees the potential to get more out of you.