The Ultimate Guide to Closing Your Next Real Estate Deal

I need to do to this house and try to get it lined up.

All right, well, let's see if I can take that away so, you know, so you don't have to. But it really depends on what you want to do. So first thing that we have to do to see if, you know, we can work together is we got to figure out what we believe that the retail value of this property is. The ARV, they call it the after repair value, ARV, of this house after it's fixed up. So you You've probably done your research. You have an agent friend. What is he saying that he thinks the house could be sold for if you fix it up?

So when I talked, it was— we started this conversation, uh, shoot, beginning of— beginning to middle of June. And, uh, when she had come in and looked at it and Went through the whole house and she had said, you know, low end you're about $280,000 if you were to list it as is. Put money into it, you could fetch anywhere up to $340,000 with the way the market is right now.

Okay, so let's, let's see if she's right because we can just look at the data. So this is your house right here. So this house right here sold for $290,000. It's 1,000— okay, I'm going to have to change the filters because yours is 2,000 square feet, right?

Yeah, it's upstairs and downstairs.

Okay, so $1,800, we'll go low and we'll go high with $2,200. Is that cool? We'll spread it a little bit with us.

Yep, that works out.

Okay, so let's see what in the last 90 days what's been selling. So this house sold for $322,000. 5-bedroom, 2-bath, and yours is 5 bedrooms, right?

It is 3 bedrooms.

Okay, 3 bedrooms. The basement doesn't have any bedrooms down there?

No, it's unfinished.

Okay, so the basement is not finished. Okay. Is it just studs or is it, you know—

So my renter actually made a room down there.

With drywall and everything?

Yeah, it's not the best drywall though.

Okay, well, um, so let's look at this one. $365,000. Well, I mean, let's take a look at this thing. I mean, if you could get $365,000, that'd be great, right?

Oh geez, I would, I would be jumping up and down all over the place.

Well, let's take a look at this thing. Oh wow, okay, so, uh, well, I was gonna say wow, they must have really made this thing nice, but, uh Look to me, it looks decent, you know.

Doesn't look anything special.

Yeah, that's nothing special at all. So it says it sold for $365,000, was on the market for— let's see, days on market 7. Yeah, FHA, that moved quick, huh? 3 bedrooms, 3 baths, so that's a good comp for you. I mean, that's I would say that's a good comp. What do you think?

I mean, I don't know anything about it. That's why it's not my area of expertise.

Yeah, it's just pretty simple. I mean, we look at what's selling and we see, you know, how much your house would— how much would need to go in your house to get it like that. So that house had a finished basement in it. This one, let's take a look at it. Newer floors, it looks like the countertops aren't— that doesn't look like granite to me, it looks like Formica. That room, boring, boring, boring. I mean, nothing updated, right? It looks clean, but nothing like they did a full remodel on it, right? Okay, so that's $322,000 they originally listed, but the sold price, it went up a little bit, okay? And that sold in May. So this one sold for— is on sale for $418,000, but this is a new build. So I would say this isn't a comparable because these are newer, like a newer building or a newer model. And that's really, you know, that's nice, right? So from just my analysis, I would say your property is worth anywhere from $322,000 to $360,000 fixed up, right? And there are some lower comps. Let's see this one. That doesn't count because that's a townhome. $265,000. You also want to look at like the bad too, right? If I'm an objective flipper, I don't want to just go with the highest stuff and just hope I can get the best. And same with you, right? Like if you're going to flip it yourself, you want to know best and worst case scenario.

Yeah.

Okay, this one decent, sold for $265,000, 1,800 square feet. Very interesting, right? That one sold for a lot less. That's not good. $363,000. Okay, this might be a good one too. Is this helpful? I just want to— I like looking at stuff before I make my offer with the sellers, if you don't mind.

I don't mind.

Okay, let's take a look at this one. This one might have been flipped, let's see. Wouldn't say it's flipped, but decent condition. But they do have finished basements, and in order to finish a basement— like, do you plan on finishing a basement like this, like doing the drywall and putting everything down there?

Well, that kind of depends on price point and if it's going to really going to make me any money. I mean, I'm not going to go put, you know, $15,000, $20,000 into something that I'm going to make $5,000 on. Okay, financially doesn't make sense.

All right, so this is the purpose of this call is also to kind of find out what your takeaway is because I don't know if you've sat down and crunched your numbers on, you know, all your options and what's going to net you the most money because you're a savvy guy, you're smart. So you look you definitely want to know which one's going to be the best option for you. So I have a spreadsheet that we can put all the info into and then I can give it to you. And then I'd like to buy it. If you don't want to sell it to me, then you can flip it or you can list it, okay? So let's go with the numbers. I think your home with a finished basement could go probably between anywhere between $320,000, what we saw in $360,000. So let's— what do you think? I would say to be safe, $330,000. Do you feel good about that, or do you feel like that's too low if you were to finish the basement?

I'd say finish basement, $330,000.

Okay, so let's put in this information. So it right here, as is listing, your agent said— did she say $280,000 if you just listed as is?

Yeah.

Okay, so $280,000 as is. I'm not going to put in my cash purchase price yet because I want to run these numbers with you. And then ARV is $330,000 with the finished basement. In order to finish a basement, you have 1,000 square feet down there and 1,000 up top, right?

Yeah.

So 1,000 square feet, it's usually about $18 per square foot. To do like a light remodel. I'll show you the numbers I got right here. So a light, a basic remodel is $18 per square foot, medium is $24, and everything is $40. I think if you're going to redo the basement, what else needs to be done up top?

Flooring, paint, cosmetic things, I mean I don't see anything that's going to— like new windows or nothing like that. Yeah, some— yeah, some masonry, maybe a little bit of masonry, some exterior paint on the fascia, some door jambs.

Okay, well, according to my calculator, I just put in 2,000 square feet because that's the house, and then if you do a medium flip, It does 24 times $2,000, so it says that the estimated rehab value— rehab would be about $48,000. I think that's kind of high. What do you think?

I mean, if you're trying to modernize it and make it— I don't know.

I would give you— I think it's going to be $40,000 to do the basement and then upstairs. That's what I think it would cost. If the basement is not done, you're going to have to put drywall, electrical, depends, you know, is there a bathroom downstairs?

No.

Okay, so you'd probably want to put a bathroom down there to maximize your value. Bathrooms cost about $5,000. So I'd say with the painting and all the work upstairs and then redoing the basement to get to $330,000, your remodel cost would be probably about $40,000. And in order to do a basement and all that work, your whole time, it would probably take you about 3 to 4 months to do it with a crew. If you have like a really good crew that you know can just knock it out and you feel confident, it might take like 2. But if you're going to run it, it might take a little bit longer unless you have like a crew that you— I mean, do you have a crew that you would use? Not offhand, no. Okay, so it might take longer. So $40,000 is your rehab. So then I put that into the spreadsheet. So $40,000, that's how much I think it would cost me. So if I were to buy your house, I would have a $40,000 rehab in there. And for you, it might cost you a little bit more because you don't have the connections that I do. Your hold time would be about 120 days, so about 4 months. And then now it breaks down your net, how much you're going to net on this thing. Do you own it outright?

No.

Okay, so you still got a mortgage to pay off? Yeah. Okay, so this is the breakdown of what you're going to net on the property if you renovate it and you resell it. So $330,000 is what you would get. Which is what we kind of agreed what it would probably sell for if you did the basement. It would take probably about 4 to 5 months to get the whole thing renovated and sold on the MLS. Once you resell it on the MLS, you're going to pay an agent to list it for you. You're going to pay them 3% and then they're going to bring a buyer's agent, is going to bring their buyer, which is another 3%. So it's usually 6%. That's traditionally. So you're going to have $19,800 in just fees from agents. You're going to have some escrow closing cost fees. There's no title tax and transfer tax in Utah, so I took that off. I don't think you'd need to stage it, so I'm going to take away the staging cost. So it basically takes away all these fees. And then you have the rehab costs, selling costs, insurance, property taxes, utilities, mortgage. That's how much it's going to, you know, cost you while you hold the property. So according to my numbers, and we can change any of these if you feel like these are inaccurate, it says that you would net $257,300 if you fixed up the house, sold for $330,000, you would walk away with $257,300 for the house. So that's a lot lower than the $280,000 that you were— that guy offered for just cash, right? So just— I don't know if that guy is real or, you know, if he was messing or if he could actually buy it, but that sounds like a good deal to me if someone's willing to pay $280,000 and I can not do the work. But we can change this, you know, let's just say, hey, let's say you get— the market keeps going up in 5 months, which is very possible, and you could sell this thing for $360,000. So what would you net if that was the case? I like to be objective, right? I'm not here to just, you know, make the numbers work in my favor. So you would net $285,000 if you could sell for $360,000. So then you would make more money, right?

Yeah.

But let's make it— let's bring it back down to $330,000 because that's where I think is more reasonable. Okay, so then your next option is listing it as is. We're talking it's vacant right now, you call your agent buddy up and you say, hey, just list this thing on the MLS for me right now. You would net after fees 3%, you know, sorry, 6% is the fees. Escrow, transfer tax, take that away. Home warranty, we're going to take that away because you're not going to stage it. So you're going to net $259,000 if you list it as is after the fees and commissions and everything comes out of your pocket. So you actually make more money according to this listing it as is than if you put all that time and effort into remodeling the house, right?

Yeah.

You know, let's look at another scenario. What if you didn't put in $40K to get $330K? What if you just put in $10K like you're telling me, you don't redo the basement, you just leave it as is, and you just make the upstairs nice, right? Is that an option?

Yeah.

Okay, so if that's the case, maybe you can get what, $305K, $310K?

Sure.

So if you do this, let's say $305,000. I guess I added an extra zero in there. Is this helpful, by the way?

Yeah, it's making sense.

Okay, so $305,000. So even if you put the $10K into it, and it took you a couple months to do that work while you're in California, you know, trying to manage a flip while you're gone, you're netting $269, which is better than if you listed as is. But I mean, I don't know if you've done a flip before, but it's not always fun to, you know, manage people, contractors.

I'm trying to do the least amount as possible.

I get it, I get it completely. So all I'm saying is the $280,000, that sounded like a good deal to me. And I'm not— I don't know who that was. A lot— there are a lot of buyers in this market right now who like, they don't know what they're doing and they do their cash buyers. They'll make you an offer and then they'll do an inspection and they'll say, oh, I actually need to be here. I mean, that happens a lot. So, you know, that could have been what the guy was doing. For me, I know that I put my numbers in here and I say, okay, where is it going to make sense for me to buy your house? So let's say it's worth $330,000 and I buy it for $280,000 like that guy was going to offer you. And I put in $30,000 of work. After the commissions and fees that I have to pay reselling it and the 'cause we pay your closing costs too, right? Like we're going to pay all your fees. You won't have to pay any money. You're going to net exactly what we agree on. I would lose $14,000, $14,255 if I bought it at $280,000. So if you got that guy's number, I'd call him and I'd— if I were in your situation, I'd say, hey, you still want to give me $280,000? You know?

Yeah. Well, he kind of— Burned me. So it's—

what, what happened?

Well, it's supposed to be $300,000, and then he couldn't come up to $300,000, or his funds, he couldn't come up to $300,000. He's like, well, I can do $280,000. I'm like, no, bro, like, yeah. And push the closing date twice on me, and then day of closing, he says, you know, I only have $280,000.

Dude, that is a burn.

That's his plan. But then I was like, yeah, I'll sell it to somebody else for $280,000, but I'm not selling Yeah, and that's super frustrating because, you know, that might have been his plan the whole time.

You know, just like, hey, I'll try to renegotiate the day of, which is, I think, is very shady. I mean, if I ever have to renegotiate, I do it, you know, within my due diligence period or way, way before the close. So, you know, the seller's never in a situation like this. That pisses me off. So anyway, According to these numbers, $280,000 is very tight according to this information. If it could go for $360,000, I start making some money on hoping that it could sell for more. But I mean, it sounds just from looking at the numbers, I mean, where's your head at? Are you like, hey, I'm leaning to fixing it up just a little bit, a lot? Or I'm just thinking of listing it as is?

That's really why I'm here, is to look at it and find out what exactly entails, because this is the first time I've been in here since my renter's been gone.

And you're saying it's a little worse than you thought?

Yeah, it's— I mean, it needs new baseboards and just little things like that, but that's cosmetic stuff, but Stuff that I don't feel comfortable leaving.

Of course. Well, how can I help? I mean, I'd like to buy it, but from you seeing my numbers, I don't want to get in a situation where it's kind of like risky for me. But I am willing to buy them, and we just closed on one, you know, West Valley. You know the Utah area pretty well, right? Are you there?

Yeah, sorry. Yeah, say that again.

No, I was just saying we've closed on one in West Valley. Like, we're always doing flips and we have multiple partners we work with. So I mean, we're always— we can flip as many properties as there are available. But I mean, having that been said, we, you know, it's got to make sense.

Of course. If you want to, you just want to send it to me, email it to me. That I can compare with the wife and see, kind of get somebody to kind of look at this and tell me what it's going to cost me to fix up, and then we can go from there.

Yeah, so you still are open to like having someone like me buy it versus, you know, you doing the work yourself?

Yeah, oh yeah, like I said, I mean, it's hard to do anything when you're 1,000 miles away, so I have to pay somebody to do everything.

Yeah, let me ask you this. After looking at these numbers and knowing that I've gone through them and sloughed them and able to, you know, work with you on these, it looks like either way, no matter what you go, you're going to net either fixing it up or listing it around $260,000 to $250,000. I mean, are you willing to sell this thing for cash around that price point?

Uh, it's hard to, like I said, I need to, I need to look at what it would take me to fix this and get it on the market.

Okay. Gotcha.

So I don't, I don't, obviously I can't do this, and, but I have a brother-in-law that does flooring. I have an electrical buddy that I used to work with. I mean, so The big things I can get pretty cheap, or not cheap, but done at a relatively cheaper price. But then anything major, then I'm gonna obviously have to have, I'm gonna have to have somebody here managing it.

Yeah, and you're gonna be there all weekend, you said? Yeah. Do you mind if I check it out or I send one of my guys that lives in Ogden to go look at it while you're there this weekend?

Yeah.

That would be okay? Yeah. Okay, yeah, because that's what I'll do. I'll just— I'll wait for you to kind of get some bids, figure out how much it's going to cost you to fix it, and then maybe I should just call you— what do you say, like when's next week? Wednesday, Thursday, just to check in?

Yeah, that should work.

Okay, you were saying you want this, right? You want this little analyzer?

Yeah, that way I can compare and, you know, make— with the other couple that I've gotten, talk with the wife, see, you know, look at the money, look at what's going to cost us.

Okay.

If it makes sense.

Yes, I'm going to just send this because it's a whole spreadsheet and it's hard to use. I'm just going to send you the PDF version of it if that's okay. So it's just going to be like these numbers I made. Is that okay? Okay, so I'm going to do that for you. Export. But yeah, so I'll call you, and if I can get my guy out there, I'll probably call you tomorrow or maybe just next— wait, are you only here this weekend or are you going to be back? You're going to be here next week as well?

No, I won't be here. I'll leave Sunday night.

Okay, so if I want to send someone through, it's probably best tomorrow.

Yeah, well, I have to— My mom has my keys to the house too, so.

Okay, so if we need to, we can probably get in there either way, because that would give me a really good idea of what we can pay. And then when we have another discussion, whether you're fed up with it and you want— you just want to sell it as is and get it done, I mean, we can close on the house, you know, probably next week or, you know, the following week if you want to get it done. I mean, are our closes can, you know, we're ready. So it's not a matter of like, you know, getting the money. It's just whenever you want us to close.

Okay.

Okay, well, any questions for me before I take off?

Nope, I think that's it.

Okay, I'm gonna send you this information into your email, and I'll follow up next Wednesday. Perfect. Thanks for your time, Michael. Hey, thank you. Have a good night.

You too.