I recently had a motivated seller contact me about a small house in a small town that she desperately needs to sell but I am having a hard time determining how much I should offer. There are only 2 properties sold the past couple years within a couple miles of the property and the sales prices were about $30,000 different. On top of that, the house is on the main highway that runs through the town and it is a somewhat busy road. This seems like it would be hard to value and may not see as much appreciation as houses off of a busy road. The house needs about $15,000 in repairs but I'm not sure of the ARV.
Curious on thoughts if I should just run away from this one or at least put in an offer even if it is really conservative. The lady is having health problems and really needs to sell the house which has been listed with a realtor for almost a year. I would like to at least give her an offer to consider even if it is lower than she wants. Thoughts?
Giving an offer hurts nothing. Maybe you find a gem. At the least, you help someone out and returns on that investment will give infinitely.
If there have only been 2 sales in the last few years AND it is on a major road, be extremely conservative in your numbers and have multiple exit strategies. What happens if YOU can't sell it?
If I were to do this deal, I would want to be completely up front with the seller (which you should always be doing, anyway).
I would tell her exactly what I do. Tell her that you want to make an offer to put the house under contract, and that you will then work to find an investor who will purchase the property. Explain your concerns very clearly. Explain that you might not be able to find an investor given these concerns, and that if you can't, you will have to cancel the contract. And make sure your contract is written in a way that you can cancel it without losing your EMD.
Basically, if she's willing to take a shot, you will do what you can to find an investor, but you can't make any promises.
I would make sure there are a lot of really good comps to support the value.
@Adam Lang order an appraisal.