My Offer Formula

Thank you for this information!

Paul,

You said you had it sold before you made the deal. Did you sell it to an
investor to an end user?

Gene.

When you have a strong formula like you have, the chances of success raises ten fold. Congrats!

Thanks very much for sharing this with us.

Short, sweet and to the point.

Karen

Thanks for sharing this info with us
It's to the point. I just love it.
Veronica

I sold this to a executive who was working for Motorola in Plantation or Sunrise. He had a rental home provided by the company I believe and was leaving the company and needed a home.

I came across this buyer through networking. I have many companies that are international based, where they bring employees over to the US for a extended time period and need houses.

Many do not like realtors and dealing with them, so they contact me. I do not know what they do if I am not able to assist, I never asked.

When I say sold before I make the offer, what I am referring to is the fact that I know exactly what my buyers are looking for. I always update my files monthly.

I am out in the marketplace everyday. I come across deals everywhere I turn. There are money making opportunities everywhere.

I also buy in South Beach and Miami as well so I can find deals all the time. I do turn down deals all the time. I don't buy everything I see.

There are a few fees that you are missing from you list. You have to subtract closing costs and real estate agent commissions if one is involved in the transaction.

boy i tell ya i can't thx u guys enought for all ur help.now i know how to figure it up now thx again

Bob,
don't jump to soon, there are even more fees that you need to consider if you really want to unload the property. Fees, fees, fees, I know, but without knowing all of the fees, your buyers will know that you can't evaluate a property accurately.

Let's not get the above fee calculations misunderstood, those numbers are good for investors that look to net a 15% profit after everything is considered, but if you want to open up your buyers list further you should know all fees involved.

I used the same method used aboved and showed my buyers the numbers but after every one of them got more experience they didn't won't to deal anymore because they lost money not accounted for.

Hey Pauljimmymikemarty,

I like to BUY around 65% of ARV and sell to my buyers around 70% of ARV. Works much better with professional buyers than just saying my fee is $5000 on cheap ones or $25,000 on high end ones.
As was wisely stated above your way leaves to little for the buyer, when your buyer buys from you at 70% of actual ARV minus repairs there is enough spread for them to make what they need and more!
So like your how to determine ARV, your buy formula is not what DGers should use if they want to build an ACTUAL wholesaling business.

Just my opinion Jimmypaulmartymike!

Michael Mangham
MD Home Acquisitions LLC

i thank yall again i will go back to the drawing board thx for the respones don't to mini write back i just want to say again thx

Hello DGFamily Heres a good formula to evaluate a property accurately that I got from another DGer that would work well

"-" stands for subtract

Value of the Property
- Profit of at least 10%
- Fix up costs
- Holding costs (value of the property x 1.2% x number of months I will hold the property to sell or rent)
- Closing costs (3% of the value)
- Realtor Fee (6% of the value)
= the most I will offer on the house.

Example:

$115,000 - value of the property
- $17,000 - profit
- $28,000 - Fix up costs
- $6,900 - Holding costs (115,000 x .012(1.2%) x 5 months - this included time to fix the property)
- $3,450 - Closing costs ($115,000 x .03(3%)
- $6,900 - Realtor fee ($115,000 x .06(6%)
= $52,750 - The most I would offer

I'm new to the site and this is all good information. thanks.

Hello Thomas im new as well but have learned alot by just searching and reading the forums. Welcome To The DGFamily!!

Thanks that is just what I needed. Now I know what I need to shop for.

may i ask how you were able to get involved with these companies and their employees? i know you said you're always networking, but exactly how did you get "in with" them? thanks.

Thanks for that Offer formula - info. will help the newbies on how to make an offer. And also to Mr Monopoly101.
Both of the offer formula will work - if use to different situation.
There is no one rule that will apply to all situations. But there is one rule to remember - Don't be Greedy! Just to make one big profit for one time and lose a repeat customer.
Also remember that what works in your area of expertise might not work in Southern California or Hawaii and vice versa!
A one cent clear profit made on a $1,000,000.sales is better than no sales!

Make it an Awesome Day!!

Alexbee

“Rich people choose to get paid based on results.
Poor people choose to get paid based on time."
-- T.H. Ecker

thank you so much for the excellent information. it was right to the poinrt Carol in Texas

Paul,

I thank you for the information. I will use it in the future.

Ty

Do you use the same offer formula if you are a rehabber instead of a wholesaler?

That formula is for a rehabber only if you ask me. It only has the rehabbers profit, does not include the wholesalers markup. You would have to offer $5000 to $10000 less if you are going to make money then present the deal to a rehabber for an assignment or double close.

Michael Mangham
MD Home Acquisitions LLC

Theres no wrong way to come up with an offer if the numbers are good, and you are able to add your fee while still leaving your end buyer a very good deal..

LOL I saw that you used the "term"... Nice way to sneak that in there hehe. I agree there is alot of other things that need to go into your offer. No one will touch a property that they only make 15% on, especially if they have to split that with a PM funding source or HM, TF commission. Goodness, I have learned so much just by networking and working closely with other investors. Mike thanks for all of your help with everything! Deals 20 and 21 are on the way!

you forgot manny.