I have some motivated sellers and I'm trying to structure the Option to Purchase contract but after doing the numbers using the Wholesaler calculator available on here. I'm a bit confused as to how to offer it or if I'm not doing the process correctly.
I've spoken with both buyers a few times.
1st house is worth 103,059 and was bought in 2007 for 94,500. They are asking the pay off amount of (the wife just wants to get rid of it) 83,500. The husband is asking 120,000 (way over value for the area). I know most flippers look for 65%-70%Arv - Repairs - my fee. But do I walk away because it is priced over 66950? or figure something out creatively
2nd house Arv 160,000 built-in 2004 no updates purchased for 114,000. they're wanting full price 162,000. rent 1000, I'm thinking to offer 85,290.25 because that leaves room for a nice profit for my buyer and renovations and their closing costs.
This seller is also asking 55000 for another home he owns but the arv is 30,000 because of the area which he purchased around the same time. I was thinking of offering 17478.80
Well, you can offer anything you want, but if they want market value, they wont sell to you. on the first one, the husband wants $120K but its worth $103K. DOesn't look like there is much room for a deal here.
It never hurts to put in a low offer, and try...
@Christine Kankowski thank you for replying
That's what I was thinking, not a lot of wiggle room or equity.
Unfortunately in our area those numbers don't work. Most properties are top dollar right now, which is squeezing the profit margins slimmer and slimmer. There are deals out there, but from a wholesaler stand point you need to be creative in digging up your leads. The prices you are seeing are retail, not off market. I have made several low offers and its typically a waste of time in our area due to the low inventory and high demand. Also, investors work off of different numbers; for example, we don't typically touch anything with less then $30,000 profit but some will do $5,000. To each their own.
They don't sound very motivated. Motivation is not words but prices. None of these people appear to have a motivation other than getting top (or higher than top) dollar for properties. (Except maybe the wife of the first couple, but the payoff amount is not a wholesale price, as there is no room for an investor. If ARV is $103K, and someone has to sell it retail eventually, there's about $9300 in expenses to selling it. 103K-9.3K is 93.7K, for something acquired possibly at $83.5K + a few thousand in closing costs. Who'll buy it from you for a margin of almost nothing?)