Possible REO deal. Need help. - Posted by Laurie (NC)
Posted by Laurie (NC) on March 09, 2004 at 10:00:20:
Sorry this is so long… I have looked at a brick/wood 3BR/1.5BA REO in NC. Here are more details: Asking $75,500 (listing realtor said home could probably go for $80/85K), 1252 sf, built in 1979, $922 annual taxes, on market 1 month, good condition. The listing agent provided me with these “sold” comps:
Location/Desc SF YearBuilt SoldPrice BR/BA
1)home next door 1257 1979 $74,500 3/2
wood siding,HUD, had mold
2)home down street 1064 1979 $67,100 3/1.5
brick/vinyl,HUD, had mold
3)Within miles 1034 1985 $80,000 3/1.5
Wood
4)Within miles 1116 1983 $89,900 3/2
5)Within miles 1508 1967 $86,500 3/2
All brick
I’m not sure of the repair/cosmetic fix-up estimate, but this is what apparently needs to be done:
1)get new carpet or clean light blue carpet, 2)upgrade kitchen cabinets (have old brown cabinets, but could paint white), 3)wood siding on sides has some water damage, so was considering fixing/painting them or replacing w/vinyl siding, 4) paint front and back wood siding 5)stove & DW look old and not sure of working condition (may just need cleaning, but may have to replace + new frig), 6)laundry room had some water damage due to leak from washer, so I plan to get plumbing checked/repaired, and paint entire laundry room 7)other cosmetics.
My 1st question, using the comps, how do I determine FMV or ARV (do I calculate an average)? I understand the 70% ARV - repairs - closing and holding costs,etc, but am considerng offering $65,000. I had an experienced investor look at the home & he suggested me offering $65,000 and cosmetics & repairs should cost ~ $1,000 using his rehab crew. Should I waste time getting estimates from contractors prior to making an offer, or should I make my offer 1st and then negotiate price if my offer gets accepted and after inspection? I would like to rehab the home and reselling over the next 6 months. My exit strategy would be to sell L/O or rent to Section 8 tenant.
Thanks!