Deal or No Deal!?!

[Namon Thorn]

Hi BP Fam!!!!

I would like to "pick your brains" again. I had a guy (seller) called me and said that he had a house in Amite,La for sale. He told me that it was a two bedroom. (It's a"junker"). It was built back in 1966 wood frame 1475sqft.The seller, is asking $30K. Per the assessor's mrkt val it's worth $39245. However, the house has been vandalized. Everything but the kitchen sink is missing. Wholes in the walls etc.... Anyway,I have found out that the house was purchased back in 2001 for $28K. I wanted to make the seller an embarrassing offer of anywhere form $5000-$6500 ( maybe). The house if fixed up should bring about $25k-$30K. The neighborhood is in lower income area. of Amite La. Do you think that would be a "good" offer? Thanks for your response in advance. Sincerely, NewB Namon

[Chris Piper]

First of all @Namon Thorn never go by the assessed value. That means nothing. Get comps from a realtor, and get them to send you a CMA(comparative market analysis). This will tell you what the house is really worth.

Second, you need to know what the cost of the repairs will be. Get a couple of reputable contractors out there and have a real estate agent let you and them in to give you some estimates. Here is my formula for knowing how much I can offer:

***EXAMPLE OFFER***

ASKING $25,000

$50,000 ARV

$35,000 *70%

$20,000 -Repairs

$3,000 -$3K Closing Costs and Points for Borrowing Funds

$5,000 -Profit(=10% of ARV)

$1,500 -Counter Offer Margin(=3% of ARV)

$5,500 = Max Purchase Price

$4,400 *I Make my initial offer at 80% of Max Purchase Price