82 DEAN GRAZIOSI
Our closing costs at sale: We’re going to have closing costs involved on both ends, but usually more on the sale side. From experience in our area, we know that these will come in at about 3% of the selling price.
88% - 3% = 85%
That last one is in bold print because this would be our offer if we didn’t have rehab expenses. It would amount to:
$98,000 value x 0.85 (85%) = $83,300 In our area, we can adjust now and then, but we know that every offer we make should be 15% below asking price right off the bat. But that only covers the costs we’ve already mentioned, and there are more adjustments to make.
The rehab cost: Remember that we need to put $10,000 into this house before we can sell it.
Our profit: We treat our profit like a cost, since we want to be sure that it’s built into our deals. We want to make $20,000 on this deal, so that comes out of the amount.
$73,300 - $20,000 = $53,300
Please Note: The $53,300 is the maximum amount we could offer based on our above formula.
This is another bold number because this is what our costs and profit requirements dictate to be our offer. However, we never offer full price, leaving some room for negotiation. It gets a bit arbitrary at this point. We decide to offer $48,300.
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