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How We Make Offers
Our Offers Are Based On Your Homes "After Repair Market Value"
Meaning that we look at what the value of your home would be if it was completely fixed up, based on this we will formulate our offer to you !
Here's and example:
1. Imagine this is your house (the one shown below) that you want to sell for cash...
2. Also imagine that Bob (your next door neighbor) has an identical house as yours, except for some incredible upgrades he made, such as: New granite countertops, new roof, hardwood floors, removed wallpaper and applied fresh coat of paint inside and outside the house.
3. Bob sold his house for $300,000
What we know:
We know that if we make the same upgrades to your house (bringing your house to a very similar condition as your neighbor’s house), we would also be able to sell your house for $300,000.
Therefore,
We know the Market value of your house if we fixed it up (in this case $300K), and we know the cost of repairs/upgrades.
We can now make an offer that works for us. If this offer also works for you, great we close and you get your money at closing! As you can see, we make offers based on the market numbers, not based on how desperate you may or may not be to sell.
For those Math lovers you will appreciate this section. We value honesty and transparency. We have no issues sharing with you how exactly we formulate our offers.
[Your Offer] = [After Repair Value] – [Cost Of Repairs] – [Our Selling Costs] – [Our Minimum Profit]
But in order for you to understand this we need to define some terms.
After Repair Value (ARV): This is what the market value of your house will be AFTER we buy and renovate the house. Yup we are just like your favorite HGTV flipping show.
Cost Of Repairs (COR): This is what our cost will be fixing/updating the house AFTER we purchase it from you.
Our Selling Costs: Although we buy houses without involving agents, we on the other hand, have to use an agent to sell that house again AFTER we have purchased it from you and fixed it up. So we have to pay agent fees, closing costs, taxes, holding costs etc. These are all the fees you do NOT have to pay, if you sell your house directly to us ;). This is usually 10% all together of selling price. (Our Selling Cost = 10% x ARV)
Our Minimum Profit: Yeah, this IS a business after all, and we wouldn’t be able to stay in business, buy more houses, pay contractors, plumbers etc, if we didn’t make some sort of profit. However, we keep this to an absolute minimum so we can present you with the highest possible offer. See, our business model is structured around making many deals with a little profit per deal, and not a few deals with a huge profit per deal. This benefits all.
In Other Words
The market value of the house (after we fix it up), minus ALL our costs fixing it up (including our profits), will be the offer. How simple is THAT! Congrats, now you are an expert at this! But want to be sure you understand it?
How about another example:
Let’s take another house we recently bought and share with you how it happened. Let’s say this is your house in its current condition:
Now remember, your neighbor Bob with the exact same house as yours? He got a new roof, updated the kitchen and bathrooms, put granite in, removed carpets and put in hardwood flooring? Well, this is what his house looks like after he did the changes:
Well, no wonder he sold it for $300K, it is gorgeous! WOW!
In order for us to also be able to sell your house (well, our house after we buy it from you) for $300K, we need to bring your house to the same condition as the house of your neighbor, or better, so that we can also sell it for $300K!
Why?
Because we will not be able to sell the house in this current state for $300K when all the other houses that are currently for sale in your area look as gorgeous as your neighbor’s. Would you as a buyer be interested in buying a house in lesser condition for $300K when a much nicer house sells for the same price? No, of course not!
So an obvious next question you’d ask, would be:
OK, if the house after it is completely fixed and updated would sell for $300K, for how much would it sell as is? Let’s say you contacted an agent and she/he says, that your house as is, in its current condition is worth $190K.
Now you have contacted the most awesome, friendly and amazing house buyers in all of Corpus Christi… (us.. duhhh)! If you have not,… well, shame on you, you really should!
We would come in, with our contractor and if we can, our agent. (We bring our contractor and our agent to the walkthrough, so that our agent tells our contractor what needs to be fixed (as he/she knows what buyers are currently looking for) and what does not need to be fixed (to save on the cost of repairs)).
Our agent: tells us, that we need granite countertops, because the neighbor across the fence that sold his house for $300K, also has granite, as well as hardwood floors, removing wallpaper, installing new appliances etc.
Our contractor: gives us an accurate COR (Cost Of Repairs). The more accurate these numbers the more accurate (and the higher) your offer will be! Let’s say our contractor gives us a cost of repairs of $70K