It’s actually pretty simple, we look at the comparables in your neighborhood, then determine what repairs are needed on your home. We then factor in our costs to generate an offer for you.
It breaks down like this:
[Your Offer] = [After Repair Value] – [Repair Costs] – [Our Selling Costs] – [ROI]
After Repair Value (ARV): This is what the market value of your house will be AFTER we buy and renovate the house, which is based on comparables in the neighborhood.
Repairs Costs: How much it will cost US to bring the property to market standards.
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% altogether of the selling price. (Our Selling Cost = 10% x ARV)
Our ROI: since we ARE a business after all, we wouldn’t be able to stay in business, buy more properties, pay contractors, plumbers etc, if we didn’t make some sort of return on investment. 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 all parties happy at the time of closing.