Flipper/Rehabber · Springfield, MA · Member since 2016 · 641 posts · 204 votes
Does anyone ever mail out to properties over the median sale price? I’m looking to expand my marketing and I was just wondering if I’d still find motivated sellers/yucky houses going over the median sales price. Please help
@Jose Castillo This is just a thought exercise at the moment for me, but let me walk through what I'm thinking. Obviously your final intended use/disposition method affect this rational.
Median price for area = $150,000
FSBO = $300,000 and they owe $45,000 on loan
ARV is $385,000 and repairs/costs are $32,000
.65 * $385,000 = $250,250, minus repairs = $218,250, minus $10,000 wholesale fee = $208,250 MAO.
If you can get this house for $208,250, you can wholesale it or flip it yourself. Median price did not impact this equation at all.
This leads me to believe that using median price for narrowing selection has more to do with reducing marketing budget via law of averages. I'm sure someone will be along to show me why this is wrong.
Also, by this logic, the amount above median price doesn't matter. Only the spread matters. At some point though you will be at top of market and will have to factor in additional holding costs.