25:1 Formula and Offer Amount

I would say off FMV in today's market (in our area anyway.) We are assigning properties to cash investors looking for great deals, they could care less about what the sellers asking price is (FSBO owners here are asking what they paid for and often more than what they paid in 06.) Somone please correct me if I'm wrong.

Lea
SPR Property Solutions, LLC

Hey every one

I Wanted to know how do we pay the agent's fee?

Flat rate fee

or

A percentage of the sells price?

Just negotiate the fee with them. Just negotiate to how many deals you are doing 1 a week 1 a month or 1 a year... They will take less and work with you the more deals you are doing!!

Actually, we don't pay any fees to the realtor. Typically the bank or the seller pays their commission. Unless you want to pay extra, you could.

dukeofsc,
I believe the 25:1 system is based on giving offers on property that is not moving,Finding the motivated seller!If i run a FMV,A lot of it comes from the comps of the area.The key is MOTIVATED SELLERS.

P.S.Once you have the number you are willing to pay,Knock that down 60 to 30% to get the best deal!

Thanks you all for the feedback. Of course, we just continue to learn as we go.

Hey

No problem,

We all are here to learn from each other you know

God Bless

You have to figure out if you have time to see the property then you should and get an idea as to what it would cost to repair it. After that, use the formula :

FMV (fair market value)
- Repairs
-closing (about 3% of value)
-holding expenses (about the same as real estate commission fee)
-real estate commission fee (when selling the property)
-profit (at least 10% of value or what your buyer needs)
-your assignment fee
___________________________
Equals Your Offer Price

This is the formula used when you are assigning to someone who wants to flip the property

Example:
FMV $100,000
- Repairs 10,000
- closing 3,000
- holding expenses 6,000
- real estate fee 6,000
-profit 10,000 (for end buyer)
-your assignment fee 3,000
_____________________________
Your Max Offer $72,000

Hope that helps!

That does help. I saw the similar formula on an older thread posted by one of the coaches. Thanks a lot.

It won't be long and you guys will know the 25:1 system better than me!

Nothing beats getting a property at half of their asking price!

Unless I missed something, shouldn't the above asking price be $62,000.

- Repairs 10,000
- closing 3,000
- holding expenses 6,000
- real estate fee 6,000
-profit 10,000 (for end buyer)
-your assignment fee 3,000
______________________________
$38,000

$100,000-38,000=$62,000 Your Max Offer??

Thanks........J.D.

Yes, JD, after doing the numbers it is $62,000. That was probably a typo of $72,000.

Hello everyone I am also doing the 25/1 strategy. I also have questions so, here goes. I have a team in place and 8 buyers currently. We purchase one house for 45% off FMV but no one seems to want it. It was purchased with private money which I have to pay back.
But my questions are on the offers. HOw are you guys doing it? I am making at least 5 offers a week I go see most of them, probably 90%. But honestly don't know if I can flip them or not!!!! What I have been telling my realtor find properties under 170k that have been on th market ofr over 90d,key words "must sell", motivated seller, trusts"
Give me your opinion here; this is a 3/2/1 (3bed, 2 bath, 1 car garage, FMV approx 130K it needs 10-15k in repairs, I don't have the money to rehab it and it is a REO I offered 30k they are asking 50k. I am not understanding how decide what properties I will offer on??
Please help!

I put in at least 35-50 offers a week and out of those usually I get 1 every two weeks. For the house I got for 5k, it took alot of offers. Then I put a bandit sign out in various places that stated "House 4 Sale 10,0000 Cash - Call" Then put my number. I'm still unsure about using a realtor. If I can do the same thing, then why pay for a realtor? I don't understand that. If someone can explain the realtor part to me I would appreciate it.

Destrie

When we look at properties 1st I look at our buyers criteria (all are a little bit different)to see what properties fit by finding the common thread among all of the investors criteria. We have 10 cash buyers on our list but I believe 4 are 'serious investors.' We'll find out who they are when we bring them deals. We yet to do our 1st deal. Hope this is helpful and wish you the best.

Lea
SPR Property Solutions, LLC

About the realtor, their commission is paid from the seller of the house not the buyer. I wish you the best on all of your deals.

Lea
SPR Property Solutions, LLC

I have 8 buyers probale 3 are serious and will do cash. I am pretty sure where to market, my area population is only 900000 people.

So what I am hearing is that I need to make more offers. Destrie, if you don't use a realtor how are you making the offers

Verbal offers over the phone. Once we agree on the offer, I meet them asap to sign a purchase and sale agreement.