Neighbours home on Market for 229 day's.How much do I offer them?

[MamaKaranja]

So my neighbour has his house 4 sale for 229 days...asking  $135K....looks like they have to sale with contingencies....would I be low-balling them  @ these number's?

ARV - $8/sq ft x 1426 sq ft = $ 11,408
Selling  @                              $ 135,000
                                             --------------
                                             $ 146,408  x 70%= $102,485.60 MOA

Would I be insuling them with a Bid  @ $99K. Is this worth the chase?
I plan of flippng it for a quick profit.

Home is good shape,great curb appeal ,even for a home 119 years old. Comps come in @ $190K. Great neighbourhood,with great private colleges around (The Obama's were here woeing us for votes late Oct 08') / not ??

Rentals go for $800-$1100/month.

[MamaKaranja]

Been on market for about 2 years now....gues it's been re-listed a hundred times.

[ljcramerproperties]

Mama,
What I suggest you do is find out, if you can, what the original listing price was and look at how much lower it has come down in 2 years. See how motivated they are to sell. My guess is that they are not that motivated if they are still in but you never know. Go by and see if they will let you see the place inside and take a few pictures. Let them know that you buy houses and you might want to make an offer on theirs if the price is right.

Let us know how you do!

[MamaKaranja]

ljcramerproperties ,

It's an MLS listing and I see the pictures posted on there...just don't know what their game plan is .....won't know if I don't ask right?.
I've seen les than 5 people come for a showing and nothing after that....eldery couple ,laid back and not very friendly....I'll strick a conversation with them though.

[ljcramerproperties]

hey Mamakaranja,
were you able to talk to the neighbors?

[MamaKaranja]

made small talk with them and it seems like they are not in a hurry to go anywhere....they understand the market is slow and they are loyal to the realtor who sold them the house 100 years ago....so they will stick by her until it happens for them....oh well.

[Hooch]

"""ARV - $8/sq ft x 1426 sq ft = $ 11,408
Selling  @                              $ 135,000
                                             --------------
                                             $ 146,408  x 70%= $102,485.60 MOA"""

Your numbers look a little wacked out to me so it is hard to give you an answer what it is worth.

What is the after repair value of the house (ARV)? Surely the value is not going to be $11,408 when it's fixed up.
What are the costs to repair the house?
What are they selling it at now?


And if you are basing the value on it's rental value you can not give a spread of $800-$1,100 per month. You have to be exact or this information is useless.


"""Would I be insuling them with a Bid  @ $99K."""

Also, investors are not concerned with insulting someone. It's value is its value and your offer will be a fair investment property offer. Close to the same that any intelligent investor would offer.

[MamaKaranja]

The comps reflect an average of $220 K ( most recently sold properties ) Most of them have less sq ft than the house on sale.

My  calculations .....needs little paint job.
My understanding is that we should calculate  $8/sq ft x 1426 = $$11,408

MOA = 70% X $146,408 - repair cost - assignment fee

My estimation : $102,485.60 - $ 11,408 = $ 91,077.60

My asignment fee should be 10% of MOA = $9 K.

Is this still wacked out ?

[MamaKaranja]

Forgot to subtract my fee :

So the amount I need to buy this thing is $ 91,077.60 -$ 9k = $82 K

[Hooch]

If you are confident that the ARV is $220K than
220K - 30% = $154,000 (70% of the 220K)
$154K - $11,408 repairs = $142,592  (BTW, those painting costs are high but that's Ok because the investor will probably want to do a few other things to make it sell quickly)

$142,592 is your maximum allowable offer, now subtract what you want to make from that.

Now, you are basing this whole thing on 70% of the after repair value. MAO is the Maximum Allowable Offer that an investor should pay. Keep in mind the word Maximum. Most investors are doing better than this, especially in this down market. That 70% is at the upper edge that an investor should pay. Not a dime more than that. They won't be making that whole 30%. We have holding costs and most of us figure in 6 to 9 months of them for a worst case scenario during this poor economy. 

[MamaKaranja]

I may be too ambitious in this deal....this is a twin and the house attached to it is valued at $144k...still the  comps give average of $ 220k....townhouses directly across from it are valued @163k averge.

so the numbers should still be as you suggest.
 Does this alter the figures...flipping is the exit strategy here,so holding cost does not apply....would walk away if it doesn't pan out as planed.

[Hooch]

Let me make sure that I am clear.

What are you doing with the property? Wholesaling it to an investor as option 1 and fixing it up and flipping it yourself as option 2? The numbers are different based on what you are going to do with it. But regardless, if you buy it as a wholesaler would, you will benefit from the wholesale and the flip.

The house that you plan to buy will have an ARV of $220, right? The half of the twin that you plan to buy will be worth that?

If an investor was to purchase this property from you, what they are buying will be worth $220 when they fix it up. Not the whole house but the portion of the twin that they are buying, right? You are not talking about theirs and the one next door combined right?

[MamaKaranja]

The ARV ,as determined by the comps reflect $220k....Realtor.com shows the other twin @ $144k value.
I am not factoring in the other twin at all.

[Hooch]

So this is basically a house that shares a wall and one side is worth $220 and the other is worth $144. Right?

If this is the case I would do a little more investigation. This freaks me out a little. I would get down to the bottom of exactly why one side of a house is worth significantly more than the other.

My offers are always based on a worst case scenario.

[MamaKaranja]

am missing something....The asking price is $135 k after being on the market for 243 days to date....My ARV is what I figured based on the 5 most recently sold homes around it ,the past 6 months....am I not calculating this the right way?....Is this not the way to do it?....Also plese consider the other twins across the street @ $163k,built in 2001....the house am looking @ is circa 1860....am i missing something?