WHAT SHOULD I OFFER ON AN REO?
I'M A NEW INVESTOR AND I FOUND AN REO THROUGH LISTING AGENT IN A HOMEOWNER NEIGHBORHOOD. ASKING PRICE IS $62,000 BUT AGENT STATES BANK IS VERY MOTIVATED WANTS TO MOVE PROPERTY WITHIN THE WEEK. AGENT SAID $52K WILL BE STRONG OFFER. I DID SOME RESEARCH AND PROPERTY NEXT DOOR SOLD FOR $70K IN 4\03'. HOMES FOR SALE ON STREET GOING AT $70K 2 OUT OF 5 ARE REO'S. I DID FIND HOME FOR SALE 1 STREET UP FOR $90K.
THIS HOUSE NEEDS NEW KITCHEN AND APPLIANCES , CABINETS , ETC., CARPET AND PAINT. I DID NOTICE SOME MINOR WATERDAMAGE IN CEILING UPSTAIRS BUT ROOF LOOKS OK AND I SAW SOME WATER LEVEL MARKS IN BASEMENTS WHICH LOOKS TO BE FROM DRAINAGE PROBLEM OUTSIDE OF WINDOW...(QUICK CURE)
I'M CONCERNED TO OFFER CONTRACT AFTER DOING NUMBERS. CAN SOMEONE GIVE ME SOME ADVICE.
I SECURED LOAN THROUGH HML
LOAN AMT $52K
CLOSING COST $6700
REPAIRS $7-10K
PAYMENTS $760mo
EST. ARV $85K
I CANT SEE THIS DEAL WORKING UNLESS I OFFER WAY BELOW ASKING!
ANY ADVICE WOULD BE WELCOME.
THANKS!
:-?
I'm a new investor too; just do your do your homework. go to your courthouse and find out what the original mortgage was and so on.
I had a friend that invests and he told me that if your not embarassed by your offer your offering too much.
so make the numbers work for you and make yor offer. If they take it, good for you, If not go to the next one.
good luck and keep at it.
Hardcash,
Work backwards to see what you should pay. In other word, 1st consider your exit strategy, ARV - fixup costs - closing - Holding cost during repair and time to sell (careful not to under estimate) - Profit =offer. Offer low, you can always come up. If they are truely motivated , play up the fact that you can close quickly.
Good luck,
Kelly(WI)