Estimating a property

6 Replies

How do wholesalers estimate the value of a property? Is it based off of sqft, the condition of the home, what other houses were sold at in the area? How do put a price on a home selling as "as is" for a wholesale deal?

The value of the property after repairs is usually estimated by looking at recently sold homes that are similar in Sq ft and bed/bath.  Other factors are looked as well such as age of the property,  the quality of the upgrades you intend to put in. 

The price on a home selling as is would be ARV minus cost to do repairs/renovation. Of course you'll need to subtract your profit and other costs from that as well.

Hope that helps! 

the short answer is you need to run comps and then apply your purchase formula and then work from there.... Maybe you should read the beginner's guide on this site, they're very insightful 

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Hi

I am doing all the above, but my MAO to buyer always come way less than the Asking price. Looking at a property now of which Asking price is $128,000, after rehab, which is currently being done. Minor rehab still to be done. Comps, show ARV is $120,328 x 70% = $84,220(all in cost for end buyer). If I deduct minimum repair cost of $10/sqft (1,352 sqft) = $70,700(offer to end buyer) - $5,000(fee) = $65,700(MAO to seller).

Is this correct? Most of rehab has already been done therefore doing $10/sqft for repairs(light fixtures, ceiling fans, painting of interior walls). Or is it at times not even necessary to calculate rehab costs. Know that with a turn-key property you might not have to have it done.

At loggerheads as all offers have thus far been declined, because of this?

Any input will really be appreciated.

*Mortgage is $88,000 outstanding, so no equity.

Originally posted by @Astrid Van Boom :

Hi

I am doing all the above, but my MAO to buyer always come way less than the Asking price. Looking at a property now of which Asking price is $128,000, after rehab, which is currently being done. Minor rehab still to be done. Comps, show ARV is $120,328 x 70% = $84,220(all in cost for end buyer). If I deduct minimum repair cost of $10/sqft (1,352 sqft) = $70,700(offer to end buyer) - $5,000(fee) = $65,700(MAO to seller).

Is this correct? Most of rehab has already been done therefore doing $10/sqft for repairs(light fixtures, ceiling fans, painting of interior walls). Or is it at times not even necessary to calculate rehab costs. Know that with a turn-key property you might not have to have it done.

At loggerheads as all offers have thus far been declined, because of this?

Any input will really be appreciated.

*Mortgage is $88,000 outstanding, so no equity.

 Max Purchase Price $65

Repairs $13

Total Cost$ 78

ARV $120

Gross Profit $42

Closing Cost $12

Net Profit $30

ROI 38%

38% ROI is quite a gain, so yes you have quite some room for negotiations.

You should probably always calculate rehab, or at least think deeply about it ....

If there is no equity in the home they might not be too motivated to sell. Anyways good luck! 

Thanks Ken

Can I ask you how did you calculate the gross profit(before any deductions), net profit(after all deductions)? As well as the ROI? Was that 30% of ARV. How do you do your calculations(minus, multiply, additions). Are you able to break the above calculations down for me please?

My REA got back to me up about questions I had concerning removable/clearing of rubble round the house and basement/workshop. Moving location of toilet, as in front/very close to shower door. Unable to, small bathroom.Walls are painted white, but couldn't see as there is no ceiling light fixtures or fans. She suggested carpets in bathroom and laundry be replaced with tiles. Carpets in living area and bedrooms with hardwood floor. Kitchen wall replaced by bar/open counter area. So it seems as if there is still a few things to be done that can/will push up estimated repair cost. In spite of other repairs having been done.  Take note of what you said about repair cost and motivation.  Apparently they won't go for less than $80,000.