Lecture Notes: Simplifying Offer Price Calculations in Real Estate

Introduction

• Purpose: Introduce a simple process for calculating offer price in real estate.
• Outcome: Make accurate, data-driven offers in five minutes.
• Benefits: Higher assignment fees and closing on more deals.
• Not Covered: Traditional formulas like ARV times 0.7 minus costs.

Example Case

• Location: South side of Chicago, South Vernon Ave and East 78th Street.
• Property Type: Frame single-family home, two stories, full gut renovation.
• Key Features: Unfinished basement, two-car garage.

Step-by-step Process

1. Identify Property Pocket

• Focus on specific neighborhood pockets.
• Avoid crossing major roads, highways, rivers, etc.
• Aim for accuracy by staying within the neighborhood.

2. Set Filters on Real Estate Platforms

• Platform: Redfin.
• Filter: Sold properties, single-family homes.
• Time Frame: Start from one week to a year for a broad view.
• Sorting: Price from low to high.

3. Analyze Comparable Properties

• Look for properties in similar condition (full gut needed).
• Distinction between frame vs. brick homes (brick more valuable).
• Identify investor-purchased properties through descriptions.

4. Evaluate Property Details

• Factors: Number of bedrooms, bathrooms, square footage.
• Investor Indicators: Cash offers, tenant details, "as-is" sales.

Example Analysis

• Property 1: 2 bed/1 bath, 900 sq ft, sold for $51,000.
• Property 2: 4 bed/2 bath, 1800 sq ft, partially finished, sold for $65,000.
• Property 3: Brick full gut, sold for $75,000.

Determine Offer Price

• Consider lowest comparable sale prices.
• Aim for an offer around $45,000 to $50,000.
• Adjust for property size and condition.

Additional Analysis

• High to Low Sorting: Check for after-repair value (ARV) examples.
• Price History: Investigate past purchase prices by investors.
• Current Market: Check for properties currently for sale or under contract.

Conclusion

• Use neighborhood-specific data to determine offer price.
• Look at both sold and current listings for comprehensive analysis.
• Strategy provides a way to calculate offers quickly and effectively.

Next Steps

• Learn strategy for finding cash buyers through additional resources.
• Watch recommended video for more insights on securing cash buyers.

Note: Always cross-check data from multiple real estate platforms to ensure accuracy.