Welcome to PlanetSavers University Teleclass #1 Today we will look at a “Real Deal” And analyze it thru the eyes of the CMA or Comparative Market Analysis This form should be provided to you by your Realtor. Dont leave home without it. The following slide showed up in my email. Let’s take a look. 1 G r e e n E a r t h E q u i t i e s . C o m
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Does this add value for a wholesale transaction?
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This is the text I sent back to the Realtor. It is always the question You need to ask.
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Text These are the two listings on Winery 5 G r e e n E a r t h E q u i t i e s . C o m
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This means you can buy a property and agree to fix it without paying before the close of escrow 13 G r e e n E a r t h E q u i t i e s . C o m
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Contractor’s Bid to get the property to Ground Zero = Ready to start Renovation
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The Other Address on Winery from the CMA
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Boarded Up = Nice Notice square footage. Is it the conversion? Pool - liability & money pit
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Bad Comps Too far away and too old, 2-1, & 3-1’s aren’t comps Cyberhomes is usually better than this! 19 G r e e n E a r t h E q u i t i e s . C o m
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More Bad Free Comps Too far away
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Conclusion: The Free sites sometimes Have valuable info, but not as good as a Well selected CMA from the MLS Get a good Realtor for your team Or Become One.
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Let’s make an offer. Back to the CMA The CMA is the best single Starting Place to Start. 23 G r e e n E a r t h E q u i t i e s . C o m
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Median is skewed by the24 REO’s Use These +$10 G r e e n E a r t h E q u i t i e s . C o m
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Observations: Separate the REO’s From the “normal houses” The last two are similar Our Renovation will Make it worth $10-20K more. This will be our ARV 25 G r e e n E a r t h E q u i t i e s . C o m
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ARV = After Repaired Value This is the common term used By Investors Next we want to calculate MAO = Maximum Allowable Offer
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Basic Formula MAO = ARV * .70 - Renovation Safer Formula MAO = ARV * .65 - Renovation These are MAXIMUMs Offer less, do the counter dance, Then negotiate again. 27 G r e e n E a r t h E q u i t i e s . C o m
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ARV = $130,000 *.70 = 91,000 Fire repair = -10,400 Renovation = - 40,000 MAO = 40,600
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Remember Using .65 instead of .70 is a safer formula for beginners.
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Another Method 1. Start with ARV = $130,000 2. Multiply by .85 = $110,500 (this .15 covers comm, closing & carry) 3. Subtract desired profit = $20,000 4. Subtract the repairs = $50,400 5. MAO = $40,100 Here your profit is visible and it’s all you have to make mistakes with! 30 G r e e n E a r t h E q u i t i e s . C o m
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This is “Live Ammunition� A real deal that someone could do. GEE will not be offering on this property as it is not in our target area. Let us know next week what Happens and which of these houses is a better buy. (I would offer on both) 31 G r e e n E a r t h E q u i t i e s . C o m
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Next Week Another Real Deal in the next stage: Negotiating Round 2 in the Due Diligence Stage After the first price is accepted. It will be a house that I have currently in escrow. 32 G r e e n E a r t h E q u i t i e s . C o m
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