How We Buy Houses

How do we calculate a cash offer?

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We are well aware of the question plaguing you since the start; “How much are we buy houses companies willing to offer on my house?” We understand that your interest in cash companies work, particularly how we work, and you might want to compare cash offers. Luckily, you are in the right place. All the answers you need are only a paragraph away. However, a few steps are involved and once you understand these steps, you will get your answer. So let us look at a breakdown of how much we can pay for your house.

Our Home Buying Formula

To begin, we employ a formula to make things easier. Our formula includes four components, which we will go through in detail. But first, consider the formula itself:

ARV – TRANSACTION COSTS – MINIMUM PROFIT – REPAIRS = YOUR CASH OFFER

AFTER REPAIR VALUE

Your property’s ARV is what it is valued for after it has undergone repairs, renovations, upgrades, and all forms of maintenance. Consider it your house’s retail worth or market value when it is in perfect and move-in-ready condition. In essence, the After Repair Value of a property is a state where your home is appealing or irresistible to cash buyers.

TRANSACTION COSTS

The costs incurred during sale transactions are of different kinds. Usually, real estate investors often have to pay for loan costs, loan originating fees, monthly installments, and a 5% local realtor fee. Transaction costs often add up to 15% of the total cost.

REPAIRS

Not all home sellers can afford repairs and, unlike your traditional sale real estate agent or other cash buyer companies in Michigan, we do not compel you to make repairs. In fact, we are happy to buy ugly houses since we are local investors and will end up making renovations on the property. However, when we buy ugly houses or any house as is, we try to exercise a level of caution to protect us from spending more money. And the rationale behind this is straightforward: When remodeling a home, one can never fully predict the level of repairs a property would need. Some repairs are pretty easy to detect on the surface, like a faulty door or a broken door handle. However, some might not be discovered until the property repairs are in motion. An example is a damaged foundation or a broken pipe underground. If major repair needs like these are not detected in time, and the sale has been funded and closed, we spend more money and lose much of our profits on repairs. As a result, we pay great attention to houses during inspections. We want to ensure that we account for all significant flaws. And in the worst scenarios, we add a few “maybes’ to our proposals as our way of allocation for damages that we are yet to discover.

MINIMUM PROFIT

Naturally, like other top cash home buyers, we must make money to continue marketing our we buy houses company and supporting our families. Our profit on our flips range, but we always hope for a 15% profit, which also gives us some price protection. If we go over budget and still make 10%, we are ok. However, we may lose all our profit if a repair need springs on us. So we ensure caution where necessary. And this particularly applies to hoarder or ugly houses. We are careful not to give specific repair estimates for such properties. Instead, we employ conservative figures to reduce the burden of purchasing such ugly houses.

YOUR CASH OFFER

When we combine transaction costs and minimum profit, we arrive at a 30% difference between both elements. Applying the formula, Your Final Cash Offer thus equals ARV – Repairs – 30%. This formula helps us make fair, reasonable, and transparent cash offers. There are no hidden fees or dubious additions of any kind. We will fund all costs and write you a check for the full purchase amount. We will give you a fair price and help you sell quickly.

See what we can offer you for your house…