What Should I Sell This For??? Can I Get a Pro Answer?

93 Replies

Hi guys and girls,

So I have a pretty great deal. It's in a very desirable town and neighborhood. It's a 3 Br 2 ba and the lowest comp in the area is $335K and everything is averaging about 350ish. It needs new plumbing throughout, a new roof, kitchen update, 2 baths updated, floors and paint. The floor in one of the rooms is also slightly slanted. I don't know repairs but I estimated and hope 80K would cover that work and anything else necessary. It doesn't need to be gutted to the studs. I just want to know what I should sell this deal for. I could go with the 70% minus repairs formula and sell it for about $150K (that's also using the lowest comp and not considering that everything in this house will be brand new, a rehabber could probably pull the higher 350K) but at that number I'm making an insane amount of money for a wholesale, although I've heard of people making these profits on wholesale deals before. I just would like to know because even at the 150K mark, the rehabber is still going to have about a $105K spread before he pays everyone, I would think on a worst case he would pocket $60K after the transaction is done. Any advice is appreciated everyone. Thanks.

I hope someone replies, but be sure to keep us updated with this deal!

Sell it for as much as you can get.

But seriously, I would take 15% of the ARV and use that number as my end buyer's profit. From there you can reverse calculate what you could be selling it for.

How much do you have it under contract for?

That's good to know Glenn, under contract for $100k.

Wow, that sounds like a steal of a deal if your ARV numbers are correct.

I would get some GC's out there to put bids on the rehab. Pay them a little for their time since you won't be hiring them yourself. Get the bids in writing and present them to the investors. From your description I think $80k is more than enough, although I don't know the sq ft nor have I seen the house myself. If the bids are substantially lower than $80k you could support a higher sales price from your end buyer.

Great advice Glenn, so tell me if all numbers are correct (I'm talking repairs, I know the arv is accurate, checked the MLS), what should I sell this for?

I am going to make a large assumption that the ARV is real, correct, and obtainable within a 30 day listing period.
With that in mind, I am thinking this home will also need some electrical work, windows, and exterior finish like siding or stucco. If the foundation repairs are minor, your $80k sounds ok unless this home is larger than 2000 sq. ft.
So, if $350k exit, and a rehabber will want it for around 70-75% all in, then they would be offering $165k - $182k. Since you have it at $100k, you stand to make a very hefty profit.

Now, with that said, I will state that I have a very large doubt these figures are correct since you would have been able to lock this up at a 51% deal which is practically unheard of in today's market. In fact, the largest spread I have heard of is one I have been doing which is a 53% all in deal, but the investment capital is $1.3M and not $180k!

Hi Will, thanks for your input as well my friend. Since I became a Christian I stopped believing anything was impossible. As long as the repair numbers are correct, which I will verify, we'll be all good. I really just wanted to know if its okay for me to sell this deal for the standard 70% of arv even though I'm making a boatload of money at that number. If it checks out I probably won't ask anymore than $145k, that way I pass a little more off to my end buyer. I'll keep you guys posted. God bless.

Actually Keith, this deal is in Westfield. Union County

That's fine too, as a matter of fact, that is where he lives. He is all cash, obviously, quick close and has been doing this for 20+ years with there own in-house contracting crew. Up to you. (oh, and don't worry about me, I will make my money when he sells it - I am an agent)

I'll keep you guys posted. Thanks for all the input.

Hey everyone, I actually have another question if you guys would be so kind as to help me brought it. When I meet the homeowner to contract the deal should I bring my own contract, have him sign it and give him a copy or should I have him have his attorney review it first. I just want to know if attorneys would tell their client they're selling the property too low or try to buy it themselves.

Also I have 6 serious rehabbers that want this deal. So what's to stop one of them from contracting with me putting their EM down, just to tie up the deal and trying to renegotiate once they find out how much money I'm making. As I said I'm probably going to max my asking price at $145k and with 80k in repairs and a minimum ARV of $335k it's still a slam dunk for them, but I'd like to prevent this if I can. Thanks for all your input guys.

If the homeowner isn't interested in getting his attorney involved, no reason to encourage it. If he wants to, let him.

As for having a buyer try to renegotiate, make sure you get enough non-refundable deposit that, if the buyer chooses to walk away for whatever reason, you won't mind. I would expect a buyer to put down at least 10% on a cash deal, and I don't imagine a typical buyer is going to walk away from $15K just because they're not happy about how much you're making.

Alright J Scott, but im a little confused. i know the buyer puts down his earnest money with the contract but when does it become non refundable, immediately? Just to make sure does the end buyer(rehabber) usually get an inspection period? Im only asking because I dont know and i want to do what is customary, if you say not usually then i'll make sure we require no contigencies. Thanks a lot brother.

I noticed you didn't answer how you found the deal. I'm with the others who say it doesn't sound very realistic. I hope you'll take steps to make sure the person selling to you actually owns the property in question!

Deshone, before you give out the address, you need to be under cintract with the seller and put down YOUR earnest money. As long as they agree, you can simply offer $500 or $1000 EMD and then get that fully executed contract to escrow. Once that occurs, you have equitable interest in t6he property and can market it to your rehab buyers. At that time, you will use an assignment form assigning the contract to the new buyer for your fee and stipulate that they are to place $15k of EMD into escrow that is non-refundable and to be passively released from escrow to you. That places the $15k into your hands right away. if they walk, you keep the money and sell to the next rehab buyer on the list doing the exact same thing.

As for contracts, you should have your attorney draft you a purchase contract or use the standard state RE purchase contract.

I do a lot of marketing, thats how i found this deal. I'm not too big on sharing my exact marketing strategies, not yet at least. I'm not trying to be selfish but I'm building right now and going after market share in the north jersey area. I know this is a business of friendly competition but I don't know any other business where people come into an environment and talk about the details of their marketing strategy in the presence of their direct competition IN THEIR AREA. As far as the person really owning the home and all that, not the case here. I have tried a lot of things that don't work for wholesalers in Nj and learned some expensive lessons. I've also been blessed to find out what is currently working.

I would also disagree with anyone who says it doesn't sound realistic, I think a more suitable word would be "typical". I know wholesalers who have made more on deals. I don't think $45,000 is too far fetched if you find a great deal. Is this an everyday or every month deal, maybe not, but will deals like this pass my way occasionally in a $350k market, i have to believe they will and if i dont believe they will I'll never see it and wont have the guts to even make the offer. I made my mind up when I started that if people in AZ and FL are making 5-10k per deal on 100k houses, then My minimum profit on ANY wholesale deal should be 10k in my area where the average home is $250k-$400k. If I can't find deals at 50-65% of ARV then I'm not a wholesaler, I'm a wannabe.

Thanks Will, that answers my question. You really have a lot of wisdom brother. I really appreciate the advice everyone and I will certainly keep everyone posted with the results of this deal. God bless.

As you probably know Deshone Drummond, there is a three-day attorney review period in NJ, so if you lock in with seller on Monday, I would wait to give out the address till it is out of that review.

I got your Direct Message, it sounds like we should talk sometime after Monday or later. Good job!

Thanks for the tip Keith, I knew about the attorney review, but I was going to start showing the property while it was in attorney review. I do suppose that the terms of the deal could change while in attorney review so I can see why it makes sense to wait and I will. I just want to do everything I can to make sure I secure the buyers contract as soon as it makes sense to do so. I would think if you have a hot deal a good network of serious buyers, it shouldnt take 4 and 5 days to get the deal done. Once again I'm still very new to this and I appreciate the wealth of wisdom from you guys. Keith I will talk with you next week.

Attorney review is only granted when

a) the deal is being brokered by a licensed agent.


b) Both parties agree to it in writing.

Other than that no attorney review.

I'm from your neck of the woods and have some knowledge on westfield (plus if I'm not mistaken @Account Closed is from out that way so maybe she can chime in as both a former resident and as a wholesaler).

First of all, the numbers ARE realistic. ARV's typically start in the 3's out that way. Your rehab costs for a complete rehab will likely run about $100-110k since you want to do it up a bit more out there (normally complete rehab costs are about $80k for a house retailing in the $200-250k range). But since you say that it doesn't need to be gutted to the studs, $80k for rehab sounds reasonable. Either way $100k is a great price to get in as a wholesaler.

Your seller will likely want to forward your contract to their attorney. That's just how they do in the suburbs of northern NJ. Don't sweat it. Make sure you have your attorney ready to negotiate so that the seller and their attorney take you seriously. Let me know if you need an attorney and I'll forward you mine.

Have you looked at the cash comps (low end of the purchases should be all cash) for westfield to get an idea as to what rehabbers are paying out that way?

Also - I would make sure you cover yourself for 2 things out there: flood zones and underground storage/oil tanks (UST's). I know the neighboring town of Clark had flood zone issues but not sure about Westfield. And UST's are something you want to address in general when buying in the Northeast.

Deshone your comments on the other thread regarding Assignments vs. Double closings reminded me to comment on THIS thread about it.

DEFINITELY do a double close for anything more than $15k. YES the attorney will likely balk, if his client doesn't, as he will see it as clear evidence that he didn't do his job and allowed his client to pay a $50k assignment fee. Btw, I have my assignment fees placed on the buyer's side of HUD-1's.

I totally agree with Ibrahim
If possible execute this transaction by performing a “double close“

Most important make sure you have the property under contract with
the seller (owner). I would not even breathe easy until you have
the property totally locked up (contract wise).

Use this property has a bridge to locate future deals for
investor / rehabbers . Heck I get calls from new potential
investors/rehabbers for a property I wholesaled over 3 years ago.

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