How to vaule a wholesale deal

Question

Hi everyone can anyone tell me how to value a wholesale deal or how to make a offer I have a house whats worth 77,506 dollars, she needs to sell for tax reasons thanks

Patrick Britton · Answer

@J  Scott  hey John I bought your books the other day.  very well done.  excellent stuff and written very well.  great work!

J Scott · Answer

The issue you'll have with a house that needs absolutely no repairs is that it's unlikely to appraise at a higher value than what you buy it for (assuming you try to sell it with no repairs completed).  In other words, if you buy it for $62K and try to sell it at market value ($78K) without doing any work, it's unlikely that the appraisal on the sale would come in any higher than $62K -- so a retail buyer wouldn't be able to purchase it unless he could bring about $16K to the table (plus his downpayment).

That said, if you think you can find a cash retail buyer (they might be out there for this price home), or if you can find a landlord who would be interested at the $78K number, you could either wholesale it or buy it outright and resell it.

James Williams · Answer

Thanks guys im very new to this. I did comps myself I used the 70% rule, and called a realtor, I was off $800. Everything in the house is new. This house needs 0 repairs at all. its worth 78k, and it rents for $800 a month. Their is nothing owed on the house.. she's asking 62k.  Im new once again and I would be very happy to split my first 5 deals with someone. If they show me the right way. This has been my dream since carlton sheets lol.

Christina R. · Answer

She has to sell for tax reasons, is she in a foreclosure situation because the back taxes are not paid?  Is she hoping to extract some money out of the house after paying off the taxes?  That could potentially be a very good deal depending on the numbers.  I just wholesaled a house last summer in tax foreclosure that helped the owner pay off the back taxes in the OTHER house he was living in so he wouldn't be on the street.  There could be a great opportunity for you to help this lady and also make a decent return on your time and effort.

You need the numbers along the lines of what J has posted above (and if it's also tax related you  need those figures too- back taxes, attorney fees, charges, etc).   Then one can attempt to give you an analysis based on those numbers.

Patrick Britton · Answer

(opps...read it wrong...thought it said "how to ADD value as a wholesaler." oh well...

your value as a wholesaler to a seller is to provide them with near immediate relief of whatever it is that's causing trouble.  this means being able to close quickly (find a qualified buyer quickly) and ensure a smooth and seamless transaction - open title, review prelim report, etc.  you also need to act as a hand-holder and ensure that they are getting what is reasonable.  you never want to rip desperate people off - that will come back to haunt you, guaranteed.

your value to your end buyer is to deliver them a property at a significant discount with as much disclosure as possible.  deliver the deal to your end buyer on a sliver freaking platter with as much homework done as possible.  it should be a no-brainier (so long as your homework is done correctly) and make the buyer's decision as easy as possible.

hope this helps.

J Scott · Answer

First off, if you are indicating the house is worth a very specific number (like "$77,506"), I'm going to assume that you're getting that number from someplace unreliable -- like Zillow or a tax assessment.  First things first, you're going to want to figure out what the property is worth, and to do that, you either need to do a comp analysis or you need to find someone (a real estate agent, for example) who can do it for you.

Next, you're going to want to know a few more details:

-  How much $$$ is needed in repairs to get the property to be worth the amount that the real estate agent tells you it is (or will be) worth

-  How much it would rent for

-  How easily it would be to resell it in its current location and at the price it's "worth" (in other words, a house in a rough part of the inner city might be "worth" $50K, but that doesn't mean it would be easy to find a buyer)

Once you have that information, you can determine what it would be worth to an investor -- either a flipper or a landlord -- and that will tell you what you'd need to buy it for in order to make your desired wholesale fee.

So, if you can get those number above and post them, we can likely walk you through all the numbers...but until you have that other info, nobody can tell you what you should be paying...

How to vaule a wholesale deal

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