making the right deal

5 Replies

Hi BP

I am in the process of getting a house under contract, but I am not an expert of calculating my numbe right. Seller is asking 210k, I offer 206k. The seller use to have an agent the agent post the house for 224k, now the seller wants to sell quickly so that's where I came in.

Single house

bed 3, Bath1

tax value 185,000

7,440 sq ft / 0.17 acres

Thanks

What do you plan to do wth the house? Flip it? Rent it? Renovations? I highly recommend knowing a lot more about RE deal analysis before making an offer (which btw doesn't so much depend on asking price or tax assessed value as what it's worth to you). BP has a guide to getting started that's a good general resource, then I highly recommend you read Frank Gallinelli's "What Every Real Estate Investor Needs to Know About Cashflow...and 36 Other Key Financial Measures." Good luck!

Hi @Lourdemir Aime  - A little more info would be needed. What is your goal? To buy and hold and rent? That's what I'm guessing based on the price to tax value ratio. What kind of rents can you get? What are your expenses? Taxes, insurance, etc. Respond back with more detail and I'm sure someone can offer some advice. Good luck.

Hi @Lourdemir Aime  - That depends. Does the house need any amount of work? You'll need to factor in your repairs and holding costs somewhere to get a better idea of what to offer.

What are comparable houses selling for, listings can be inaccurate especially if they have been on the market along time.

The evidence is pretty strong the house is worth less than 224K, otherwise it would have sold when it was listed.  The sellers asking price of 210K, really isn't a reduction in her net, since she won't have to pay an agent.

What is needed in terms of repairs?  Generally most investors take 80% of the expected selling price and subtract repairs to get a purchase price.

Let's say you find comps selling for 200K.  If it only needs minor touch ups here and there you might be able to budget only 10K for repairs(in any other condition it will likely be more) you are looking at an offer of 150K.

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