Accessing the value & making an offer

15 Replies

Hello Guys, 

I'm a newbie wholesaler starting in Burlington County NJ. I sent out a few letters from a probate list and got a call back within 2 days. I set up an appointment to see the home and went on Friday. Zillo stated the ARV was 99k. Seller said she had it appraised a few months ago for 86k "but the appraiser was a friend and didn't write anything on paper". The property has roof damage and a few cosmetics issues. I'm not good at accessing the repair value, but another wholesaler said I should offer between 26 & 35k after I told him it was 1420 sq ft. I told the seller I would call a contractor to give me a repair estimate so I can give her an offer.

Please help!

You can use redfin.com to gauge values for the area. What are your plans for the house? If you wholesale it, you will need to be 65 to 70% of ARV minus repairs. If you are rehabbing or holding you could be less conservative on your percentages. If your on zillow check solds for the last six months in the area as well as the ones listed.

@Antoine Nelson  

@Calvin Fluker  is right about 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.

@Antoine Nelson  

For example: 

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

Welcome to BP Family @Antoine Nelson   It is a great place to meet new friends and learn about various aspects of real estate and more. 

Wishing you the best! 

@Antoine Nelson  , are you able to get a contractor to give you a quote on repairs? Don't trust what sellers say, figure it out for yourself!

I'm in the process of contacting contractors right now 

Originally posted by @Jacob Michaels :

@Antoine Nelson 

For example: 

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

....just left the property. Seller owes 23k, contractor estimates the repair value at 50k. I think that's a little high. I offered seller 35k

@Antoine Nelson  If your offer doesn't make you cringe when you make it, it's not low enough. If your wholesaler friend is experienced, and he said you need to offer up to $35k, you really can't afford to offer your top price up front. That's now your negotiation starting point in the seller's mind.

What's the update @Antoine Nelson  ?

You gotta start tagging people too so they know when you're talking to them

thanks @Chaz Reid  didn't realize that, I planned on calling the seller back today to see how she feels about my offer

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