Providing an offer to seller

4 Replies

How do I arrive at my MAO if I have the ARV but do not know how much rehab is?

Spoke to seller to schedule appt to see home but don’t know what my offer will be because I don’t know how much rehab is? Please help

Originally posted by @Mario Charity :

How do I arrive at my MAO if I have the ARV but do not know how much rehab is?

Spoke to seller to schedule appt to see home but don’t know what my offer will be because I don’t know how much rehab is? Please help

Hello Mario,

If the offer isn't legally binding, I would put in a contractor/engineer inspection contingency. This way, you can start the negotiation without losing much more time and you'll buy yourself some time to get an accurate estimate on the rehab. The number can always change during the due diligence process - at least thats how it is in NY.

You really have to have some idea of what the rehab to get an MAO. I would just leave the offer part of the contract blank. I also don't think it's necessarily best to try to get the seller to sign right then and there. There are times when this is the case, sure. But oftentimes, I think they'll feel rushed and like they're possibly being cheated. So it's not a bad idea to view the property and then make the offer later that day through email and then give them a follow up call.

@Mario Charity ,

Your contract is always legally binding, and always has a contingency clause for inspections. If the seller wants a contract in place, give them an offer based on what they are saying about the property. Let them know, in very clear terms, that the contract is contingent upon your inspections, and if you find unexpected details about the property, you’re going to need to adjust the offer/contract.

@Mario Charity  

As far as making an offer that would be in the right ballpark without knowing your final numbers is a little bit of a trick. In my experience, I go based on owners information and pictures if they can provide them. After that, I figure a number based on the sqft of the house. Normal rehabs in my area are around 35 dollars per sqft if it looks like a bigger rehab I go a little higher. Once I have this rough number I add a little more for contingency with this I can come up with a reasonable number so I know a good starting offer. Then during the inspection period, you can always change the price if the contractor and inspection numbers say more. If the seller will not accept the new price you can cancel at this time with no penalties.