Going to see a property

That is such a good question, I have wondered about that myself!!
Please help!

I still consider myself a rookie, however, you can submit your offer with a contingency of "whole house inspection with results satisfactory to buyer." If you find something during that inspection period, then you can renegotiate or walk away. So this all depends on what escape clause(s) are in the offer.

So this way you can walk through only the houses with an accepted offer.

You look at a house if your offer gets accepted or countered. You exercise your weasel clause in case something is too bad.
Just imagine how many houses you would have to look at, knowing it takes about 25 offers for every deal. You would be sick and tired of Real Estate in no time at all.
Go get them.
Thomas

Ty,

Use a figure that the current owner is telling you about in your current calcuations; but allow for a fudge factor. For example, if the current owners says it needs paint and flooring (let's say $6k) in repairs, then maybe double that and take $12k in repairs into your calculations + a little more 'just to be safe' (so maybe $15k if the owner say $6k).

If the current owner is honest and accurate, then you just gained an additional $6k + in profit; if the current owner is mistaken in his figures, you have some wiggle room and your deal should still work. Once you have the deal under contract (with your contingency clause(s), now you go look at the property and come up with your own estimate of needed repairs. So if the owner says $6k, and you allow for $15k in your calculations, and then you walk through and see that it is $13.5k, the deal still works and everyone is happy. Conversely if the owner says $6k, you allow for $15k, and you walk through and calculate $21k, then you utilize your contingency clause and back out of the deal and no harm is done other than a little time you spent putting your offer together and walking through the house (AFTER the offer was accepted).

Hope this all makes sense. Keep at it.

--Walter

"If it is to be, it is up to me". -Unknown

Go ahead and look at properties when you are starting off. You will learn a lot by looking at properties. But once you start putting in 25+ offers a month you will not have time to look at all the properties.

Walter explained it perfectly. The only thing I would add is that once you get it under contract, one of the best ways to get accurate repair costs is to contact 2-3 contractors to come give you quotes on the rehab job. Also, make sure to do the walk through with them so you can get a feel for what they are looking at. After a while, you will be able to estimate the repairs yourself and be very close to actual repair numbers.

of research on a house online before as well as pics before you even go out there.

Thank you to everyone for the info. That all makes sense if you're dealing with FSBO, but if it's a property that your agent finds how would you go about talking to the home owner for a repair cost estimate? Would you really be able to get a very good estimate from the listing agent?

One thing to remember is that you only need to be in the ballpark.

Here's why... Let's say your agent sends you a lead for a house with the following numbers:

$50K asking price
$15K repair estimate
$100K ARV

Suppose I was on your buyer's list and you knew these numbers fit what I'm looking for. You get it under contract, and get a couple of free repair estimates that say the repairs can be done for around $12K. Well, as your end buyer, I may have my own rehab team where the repairs would only cost me $8K, or maybe I have high-end rehabbers, and it would cost me more like $18K to do the rehab. Also, some of the things that YOU think need to be done, I might not feel the same way (and vice versa).

All you are really trying to avoid is thinking that the repairs are around $10K, and finding out they are more like $35K, and you only had $12K built in for profit, now the extra $20K puts you at a -$8K and unable to move the property.

But, if you have $40K - $50K of wiggle room, does it really matter if your repair estimates are off buy $5K - $10K? The tighter the profit margin, the more accurate your estimates need to be.

Hope this helps,

Yes that does help. Another question for you is, how do you personally figure your offer. Do you do the asking price x.7 or do you figure out the arv, subtract the 65% (or whatever % you need to be at)- rehab costs and your profit?

I believe you can get a lot of your questions answered if you listen to Deans last conference call, actually it is a web cast with Dean and Matt.
Go watch it!
Thomas

Start with a percentage of the ARV, minus repairs, minus your profit equals maximum allowable offer (MAO). Then offer a little below that number for possible negotiation up to your MAO.

Example:

ARV = $100,000
x 65%
- $10,000 for repairs
- $5,000 for your profit
-------------
= $50,000 MAO

I'd make an initial offer around $42K - $45K in general, but it depends on the market area.

Two things to make note of:

1) The percentage below ARV that you use will vary depending on the market area. In some markets, you might be able to use 55%, and in others, you might only be able to go as low as 85%. You've got to know your market.

2) I use a program that I can just plug my numbers in and they give me my Max Offer price based on whatever figures I've set it to use. The link is below. You can play with the free version to see if you like it before you pay for the premium version. But, I think the premium version is worth the $97 price. Either is good though.

Let me know if I can be of any more help,

That conference call is where my questions came about. I watched it live (well tried to with some tech difficulties. Ha!) I know on that webinar they said not to worry about looking at the property unless you have an offer accepted. That's what got me thinking and sparked this thread. Also I know they said to just take the asking price and x.7 or what ever you need to be at for your area and make that your offer. I was just wanting to know what Stephan (and anyone else that wants to share) does personally to come up with their offers. Thank you for your post though! It's always good to go and watch the webinar again and again. I know I've watched it several times and pick up something I missed each time I re-watch it.

Hi Dont you think anyone lets say, wouldnt first let you look at the property before making and offer, Ieve never ever gave an offer with out looking at the property first, how can you get a feel for it if you dont.And lets say you were asked to make an offer with out looking at it first( thats hard for me to believe)Id call a Realtor and get there thoughts on what it might be worth and write up a clause to the fact,that if my offer was way off and offered to much Id get a chance to reoffer on it, but this all doesnt make sense to me to make and offer with out me or someone I trust to go and look at it first, Jim