Hi, In a previous post, I mentioned I sent out a lot of letters and I get calls from people who maybe don't seem very motivated. Instead of throwing away those calls, some people suggested making offers over the phone to see if they will take the number.
Are there any reliable sites or techniques I can use to come up with a pretty accurate offer. I know about the ARV minus repairs formula, but without MLS access, I'm not sure how I would be able to give an accurate offer. Zillow doesn't seem to be that accurate at all. Also, does anyone email people written offers? If so, what template do you use and do you make the offer price approximate?
You need to know value whether working with a Realtor or not. Many counties have deed and assessment data on line. You can look at what other properties sold for on the same street or the same neighborhood. You can drive by those comparable properties and at least from the outside see what the condition is. And then you can view and inspect the subject and compare it to the research that you did. Or you can call a Realtor and have them do the research for you, but they will expect and maybe even require you to sign a document committing you to them, called a Buyers Brokers Agreement. But you can do your own research if you chose.
@Kay H. - You are right. Zillow sucks. Do NOT rely on it. Many of us on here have MLS access because we became Realtors ourselves to help with our investing work.
I know it's an old post for you but I just saw it and thought you might like another perspective. I do all my wholesaling virtually. I do not need to physically drive the neighborhood or even see inside the house. The reason this is possible is that technology these days has advanced to the point where, once you get the kinks worked out, you can do things this way and get deals done.
Try using these free online resources to check comps (recently sold like properties in that area). Redfin is the primary tool I use as a wholesaler---if they have it in your area be sure to use their "Price Home" feature. This lets you see what properties have sold nearby, and where.
Also, familiarize yourself with their "map nearby homes" feature.
If not Redfin, I think Zillow has similar capabilities you'll just have to play around with it to figure out how to check comps.
One key thing about seeing the comps: make sure the comps are properties that have been fully renovated inside. This is the true ARV.
If they haven't been renovated at all, this is more of an as-is market value.
The lowest comps that haven't been renovated are often properties bought up by investors, so this is the range that you need to be SELLING at to investor buyers.
Don't worry about the 70% of ARV minus repairs minus your profit formula so much. You just need to know what properties in similar shape have actually sold for recently, because that's your selling price. Subtract off the profit you want and that's the top price you need to negotiate.
let's say as-is non renovated houses in that area (with similar square footage and needing similar levels of repairs) have been selling for around $60k. Renovated ones at $100k. Focus on the $60k number--that's your target selling price. Let's say you want to make $10k. Your top offer is $50k then. But don't offer that just yet, otherwise you have no room to negotiate.
Offer $42k, and be prepared to back it up logically (low comps, amount of repairs, etc). Then you can try negotiating and have some wiggle room to eventually land at or below your target purchase price of $50k.
Negotiate a figure that works, have them sign the contract, and then market for buyers. You will have buyers, if you got the numbers right.
This is just an example. Hope this helps
I recommend the 70% - repairs as max offer to start. That will give you a healthy profit and will take in holding costs(realtor commission, taxes, utilities etc.)
Find an investor friendly realtor or get MLS access. Offer an incentive so they will provide comps.
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