OfflineI have a question about what number to use when calculating what to offer when you are trying to wholesale.
I am using the following formula:
Market value (based on average comps and totalviewrealestate.com) - repair cost - 3% closing - 3% holding - 6% re agent - 20% profit - $10,000 assignment fee
I have seen some properties go to others with offers that only make sence if you use highest comp sold in the last year instead of the fair market value based on averaging all the comps in the last year.
I am guessing that they will do that because they think that they can sell the property for that amount after all the repairs.
What do you guys think?
Any active wholesaler can give me an insight on what number to use???
Any help comment or input is appreciated.
I use comps on properties that are remodeled/rehabbed the way my subject property will be done. Thus determining what After Repair Value is on my property. Making sure there are no factors that would reduce my ARV like a busy street, a junk collector for a next door neighbor, a liquor store 2 blocks away etc. etc.
I also think it is a big mistake having a hard number for your assignment fee. What if the deal would work with you making $1500. Are you going to turn that down? A $10,000 assignment fee is the exception rather than the rule. You will get that amount every now and then but I think the nation wide average is more like $5,000. Then again maybe you are in a market where average retail is $400,000. So, $10,000 would be more realistic. Just think about it, if your fee kills the deal you might reduce it.
Good luck!
Mentoring/Team Building Nationwide
Michael Mangham
MD home Acquisitions LLC
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Thank you for your answer. I will put that in place .
This will make my offers more atractive and also knowing this will bust my confidence when making the offers.
Thank you!!!