Posted by Brian(md) on July 13, 2003 at 17:51:54:
I think you just offer what you are willing to pay for the house.
Use the same formula.
ARV X 65% - Costs of Repairs - Your Comission(5%ARV) - 3% Fudge Factor
So, if the repairs are going to cost 15k. And the house would cost 245k after being fixed up…
245k X .65 = 159.25k - 15k COR = 144.25k - 12.25k Comission = 132k - 7.35k Fudge = 124.65k<<< that would be the max offer in theory.
I would initially contract for 10k less, so that they can counter up and still be below your max offer. My offer would be $114,659.
That’s if the house is in need of a good amount of work. If the house is just going to be bought and no repairs are needed, I’d be willing to pay more and just retail it. Of course, if that’s the case, I doubt the bank would be willing to work with you. They would just send it to auction I think.
Obviously the two biggest factors in figuring your max pay figure are the costs of repairs, and the ARV.