The first thing is we look into sold comparables in the area which are similar to the property sold in the past three to six months.
Next we will backtrack the cost of repairs, holding costs, etc. Then we will look at the needs of the seller and how we can best help with that such as if they need immediate cash or maybe even a partnership.
We use all of these things to make 4 to 5 different offers for the seller to choose from.
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So how do we calculate our offer prices to sellers? Again, because this is a business for us, we need to make sure that we're actually gonna make money when we offer a price to a seller. So what we do is we go ahead and we take the after repaired value or the ARV of the property. We do this by polling sold comparables in the area that are similar. If not identical, that have sold anywhere between the last three to six months, then what we'll do is we'll backtrack the cost of our overhead, our profit, our transaction costs, or holding costs, how much it costs to repair the property. And then once we get to that number, then we look at, okay, what are the needs of the seller and how can we best help them with those needs? And this may be a cash offer.
That's a quick cash offer. Maybe it's a something a little bit more longterm, maybe the seller doesn't need the cash today, but is more interested in receiving monthly payments over time. This actually helps reduce their tax liability. Maybe they want to partner on a property and they want to learn how to, you know, repair fix and flip a property and sell it for a profit. So when we go to the seller, we use all those things and then we'll tailor our offers and we'll usually make anywhere between four to five offers on a single property. So that's how we actually come up with our offer prices.
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