Making Rehab Offer, Need Advise
Foreclosure for sale through local broker. ARV about 105K, initially asking 89,5. Then discovered foundation problem. Repriced to 79,9. Repair estimate around 7,500. Spoke with broker today and indicated bank is "more than likely" going to be dropping the price more. What should I offer and how do I or should I metion the repairs in the offer. Thinking of offering around 70K or 72K.
Foreclosure for sale through local broker. ARV about 105K, initially asking 89,5. Then discovered foundation problem. Repriced to 79,9. Repair estimate around 7,500. Spoke with broker today and indicated bank is "more than likely" going to be dropping the price more. What should I offer and how do I or should I metion the repairs in the offer. Thinking of offering around 70K or 72K.
I think you should be real sure of the repair estimate before you even think about making an offer.
Get a contractor friend to look at it and give you a good estimate. Then take a look at the house and all the work it needs, get a price for the repairs and then submit an offer to the bank and keep submitting the offer every three weeks until it sells or they accept your offer.
Read the book "Buy it Fix it Sell it & Profit" by Kevin Myers.
Here is the real scenario:
ARV 105K
-$7500 repairs
-$2000 misc. unforseen repairs or added work, cleanup, painting etc.
-$3000 buyer's closing costs etc.
-$3250 (approx.) holding costs 4-6 months
-$1200 sales costs
-$6300 RE commisions
ARV $105,000 - costs $23250
=$81,750
Now subtract your profit
$15,000 (my personal min. on this deal)
=$66750
That would be the max I would offer for the property. I would start lower than that.
Good Luck!
[addsig]
Make the low ball offer..the worst they can do is say no or possibly counter offer
This property is going to be my personal residence. I actually have a comitment for repair for 8K from a local company.
Good advice from StockPro!
Does the foundation company provide a warranty with their work?
I think the structural problem of this property is going to make it very hard for the bank to unload, as well as scare off a lot of your potential competitors. I would also advise a LOW ball offer. If you have several estimates on the structural work , you may want to include the HIGHEST one with the offer. (Sometimes it is worth going having the most expensive guy in town give you a quote).
My experience is, unless it is a full price offerm, the bank will always counter. Don't get too excited. Counter in small increments.
Good Luck!
Repair estimate includes a one year warrenty.