NEED Quick Advice Please
I'll get right to the point, need to know if this is a good deal on a REO:
List=$195K
MV=$225K
Rehab=$5K
Hold(6month)=$11K
Property in pretty decent shape, just needs paint, carpet, and some updating. My agent has spoken to the listing agent and she basically told her she already has 4 offers she's faxed in to the bank and that banks will not go down very much. I was originally thinking of offering $175K but now not so sure if i will even have a chance. What would you offer?
The margins look a little slim to me. If I'm reading your numbers right? After you put 5K in repairs, and 11K in holding costs, that's 16K - if the FMV is 225K, 225-16= 209K, you're looking at best scenario (let's say you did the unimaginable and bought list, since the banks are being unflexible) of 14K in profit.
I'd keep looking. There are better deals out there.
Market time in this area is about 30-60 days. My holding costs are for worst case - 6months. Well, at this point i'm thinking of offering $187K and see what happens, but i wont keep my hopes up to much.
Those margin's are pretty tight. I don't mind the low profit number IF you can turn it around really quickly but it doesn't sound like you're that confident about doing that. If you want to protect yourself with a 6 month hold time in the numbers then I'd try ones that allow you to walk away with at least 10% of MV (even on a light fixer). There are always other deals.
I would not pay more than 180k, if your market value is correct.
How long has this property been on the market - have your realtor run an MLS search on the address not the current MLS number?
[addsig]
Market time has only been 14 days -- its new
That's pretty thin, tassod... Listing agent is either lying, or telling you a very interesting truth. If she has indeed faxed in 4 offers already, then most likely none were accepted, right? Which means that others were offering below you. It is likely that if she did fax them that many offers that quickly, then they will wait it out for the "greatest fool" to pay the "most greenage" for the place. If she's lying, well, she's lying. Determine a safe number, like your $175k and offer that to them. Do NOT modify your judgement to suit what you think they'll accept - otherwise they've won the negotitation before it's even started. Let them counter it if they don't like it. The key to any negotiation is the ability to walk away with no emotional baggage should the other party decide it's not worth it for them.
Best of luck,
Jeff
Be careful with your assumption that all it needs is 5k worth of paint and carpet. Homes are usually loaded with hidden problems that only an experienced inspector can find.
You have to ask yourself why the current owner won't or can't put 5k worth of paint and carpet into the place to up the market value to 225k.
Thanks everyone for your thoughts and advice, this forum rocks! You are all correct that i shoudn't beleive what they are all trying to tell me...basically so they can bring in the fool. I will stick to my original assumption of what i wanted to offer..(175k-180k) and if they dont like it..we both move on. Thanks again guys for all your help!