Lil problem with making offers

hi supreme617,

there is nothing wrong with the blind offer you want to put in, however the average cost of repair per square foot in the states is between $13-$16 range so low end on 2000 sq ft home is $26k and on high end it is $32k. i have been in this business a long time from a realtor to investor and now coaching real estate, and i agree with your agent, go see the houses cause you never know what you will find when you get there and if you are dealing with a bank, they are not very negotible with price adjustments after submitting your offer. narrow it down to 10 props a day if that helps.

Do it the way Matt Larson and Dean suggested. 50% of price. Let her know that's the way you're going to do it and you're not riding to every single property to check it out unless an offer is accepted.

How about 60%. Its my first wholesale deal so I don't want the agent to reject my offer because it was priced to low, esp if he would accepted the offer and I could of made money from it if the property was under charged 70 percent.

I personally do not put in blind offers because you can have one house that needs $10k worth of repairs and then another that needs $100k worth of repairs and I HATE to have to go back and negotiate a new offer.

That tends to kill a deal.

I strongly suggest looking at properties beforehand and make an offer that makes the deal.

You can always find a good Contractor to go to the Properties and let you know what all needs to be done..But be careful with using contractors cuz they tend to get upset if they look at alot of properties and not make any money..I know I would, so make sure to find the property you like and not send him out to 50 properties

that was funny

I know this doesn't have anything to do with REI but, what's a wet noodle?

Find a workable formula that will allow you to make your offers. You are getting great ideas in this thread on putting a number on it.

Sometimes you will be right on, sometimes you miss it by a little bit or a big bit. That is what the Inspection Contingencies are for. Your Due Dilligence period.

Most mls's have a pretty good system with photos of the properties. Most agents put in a fairly accurate description of the houses. Your agent should be able to send you that information.

You can also have the agent drive to the properties and give you their opinion of work item costs. You don't need to spend all your time running to all the properties. Some agents may object to performing the functions of previewing properties for you, so pick and choose which agents you work with.

You may also request your agent call the listing agent and ask questions about the property. Questions such as what is the condition, what work items the listing agent thinks the house needs, what sort of price the seller thinks the work items are likely to run, what sort of price the listing agent thinks the work items will run. It saves you alot of driving around.

In the beginning you may want to go look at them just to learn, but after awhile you get a feel for rehab costs. If they say it needs a roof, you know what they run in your area. If they say it needs carpet and paint, you know what that will run.

Ultimately, short of a whole house inspection performed by a licensed home inspector, whether you make your estimates off mls photo's and marketing remarks, or go and eyeball the house yourself, or have a contractor eyeball the house for you, you still don't really know how much repairs will cost until an inspector comes in and performs a complete inspection.

I guess what I am saying is, estimate repair costs into a reasonable range. Use a number that feels like it can get the work done.

All day everyday across this country people buy houses sight unseen. It can be done by estimating and using a reasonable formula.

Other posters here have given great ideas on using a workable number.

All the best to you.

Happy Investing!

The answer is... it depends. Sometimes large expenses like the need for a new HVAC or water heater can throw off that type of estimate. Like Dean says, you could sift sort and screen the deals that make sense with your way of estimating repairs and then once you have done so, actually walk the properties (or have your contractor do so) to see what the true cost will be, so you aren't doing further due diligence on deals that have no future. HTH

Looking at a house will be the first thing I would do when figuring out repairs, but what if your making offers on 100 properties? Its crazy to go and visit each house to find out the repairs.

properties a week or hire a teen or someone you trust to go through the properties and then figure out what a your offer and maximum offer would be. That's one hundred a month. It's not hard to learn. DELEGATE!

Maybe the question should be, do you want to go through one hundred properties to do a deal? Going through 25 properties a week, and making offers the way Matt said to, should net you one deal a week. If you offer on 100 properties and don't have an accepted offer, like Matt said, you are offering too low.
Your call.

RENinja

Yea I know what your saying. But the realtor I'm working with is a investor herself. I met her from a AREIA meeting.

Thats exactly what I was going to do, but do you know any formulas I could use to estimate repairs?

Those only exist in the I want to do this the easy way world. I do to, however, No Sq. Ft. formula will EVER be accurate. One house may need a roof, one may need a furnace and water heater, one may have mold and structural, one might just need paint and carpet. Like Elix said, in the REAL WORLD of investing you or someone you trust needs to look at the property. I personally look at 20 or so a week. Its not that hard. There is no way I could make an accurate offer with out accurate rehab costs. FELLOW INVESTORS, the rehab costs are an essential part of the offer formula. Don't guess!! Every bit as important as determining ARVs.
Just my opinion on this.

Michael Mangham
MD Home Acquisitions LLC

I will not present an offer without the buyer seeing it first because i've had three situations where a blind offer was put in and on all three, the offer was cancelled AFTER they saw the house and their estimates were waaaaaaaaaay off.

You want to make an offer on 25 homes, you look at 25 homes.