A great deal...not quite sure

[Dan Ahlborn]

I got my first call from my posters I've been hanging on store bulletin boards. This guy has last his job 6 months ago and looking to sell his 3bd/2.5bath 1700 sq ft house in a newer subdivision in North Eastern Wisconsin. This home is 7 years old and is great move in condition. The FMV is $245,000 off the tax roll. Plus there is a new house next door listed for over a year and sits vacant as that home is listed for $259,000. The seller is looking to get 190,000 and owes $160,000 I'm planning to call him back tomorrow to offer my deal. I want to offer get this property under contract for about $175k or so

I need thoughts on strategy on presenting a lower offer on a new property like this that I don't really have leverage on fixing up the property.

Comments welcome

[Jon Holdman]

Assuming the house next door is similar, then the one you're considering is worth no more than $259K, and realisitically something less.

Tax assessor values are irrelevant for determining ARV. There are numerous threads on this topic. Try searching and you should find some. You need recent nearby sales of similar houses to determine ARV.

What's your strategy for this house? Its too expensive to make a good rental, unless the rents are really high, so I assume you're wholesaling or fix-and-flipping it. If you're fix and flipping, and its in great shape, how are you going to add value? Does it need paint and carpets? More extensive work? If its been lived in for seven years, rest assured it needs at least the lipstick items.

If you're wholesaling, what do your buyer's want?

If the next door one is listed at $259 and has been for a year, I think its worth no more than about $225. A price like $240-250 is close enough to the listing price someone would have offered that and it would have sold. Plus, a fix and flipper doesn't want a house to set for a year. For a fix and flip, purchase plus rehab needs to be under 70% of ARV. 70% of $225K is $157.5K. If it only needs paint and carpet, figure maybe $5000. So, you need to buy at about $150K. Just a swag from a guess about the value. Its crucial you know a real value.