Correct way to calculate offer price?

[Chris Coughlan]

I've read conflicting ways of how to calculate pricing.
Do you start with the ARV or "as-is" value?
For example:

200,000 ARV
20,000 in repairs
180,000 "as-is" value
I want to offer $0.65 on the dollar

1)
200,000 - 20,000 =180,000
180,000 x 0.65 = 117,000

2)
200,000 x 0.65 = 130,000
130,000 - 20,000 = 110,000

Which way do you do it?

Thanks,

Chris