I located a property with a ARV of 70K. The owner is asking 49K. When I plug in my numbers the maximum offer comes out to be 40K. When I run the COMPS, other homes in that area typically the same street and same features have been recently sold between 10k and 17k. I'm sure you don't pay 40K for a home that's in an area where other properties are being bought for 4 to 3 times less. In situations like this how do you determine what you offer a seller?
@James Jacobs If the comps are very similar to the house you are looking at, you should offer at what those comps sold at. However, it sounds like the owner sees more value. It really depends on the reasoning the owner has if you will be able to get it lower. Regardless, you should have a number that makes sense to you. If you are able to get that number, then pull the trigger. Trust your judgement.
@Jeremy Pakalka thanks for the advice. And yes, I have a number that makes sense to me. Let me see if it makes sense to the owner...
@James Jacobs if similar houses nearby are selling for $10-$20k, then yours will only be worth that amount. The appraiser will find 3 "like" properties as close as possible with similar sq. footage and features and that will give the value of your property. It sounds like he's 5-10 times higher than market.
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