Are you set for the disclosure of our secret strategy? The tactic that consistently has people scratching their heads, wondering why our offers consistently outstrip those of our rivals? It all begins with the After Repair Value (ARV). Almost everything we do as a company has an end goal in sight, much like how we discuss your requirements, identifying your desired outcome.
Let’s take a quick journey through our rationale. We’re going to buy your home with cash, expedite the closing, and then employ our professional team to refurbish it for a quick sale (ideally). People are attracted to homes that are modern and unused – think gleaming stainless steel and carpets that have never been tread on.
Keeping the final image of the house in mind, we then reach out to our realtor to compare sales of similar properties via the multiple listing service (MLS). For instance, we might say,
“Hello, Billy. We’ve got a 4-bedroom, 3-bathroom, 2800 sq foot property on a quarter-acre plot. It will boast a newly fitted kitchen and bathrooms, fresh paint and flooring, stainless steel appliances, contemporary light fittings, landscape improvements, and a new garage door in front of a freshly painted house.”
Using his expertise, Billy then provides us with the most comparable listings for recently sold properties in close proximity (usually within half a mile).
Now that we have our selling price (the After Repair Value), we can then use a straightforward calculation to deduce our fair cash offer. With years of experience flipping homes, and an understanding of how to ensure we all benefit, we’ve found this formula to be the most effective – and it enables us to present you with the maximum cash offer.
ARV (Estimated Value Post-Renovation) – Rehabilitation Budget – Selling Expenses – Profit = Our Cash Offer Let’s delve into what these terms mean!
Following that, we’ll illustrate how it all fits together and to assure you that we strictly adhere to this formula, we’ll examine an actual property we recently flipped in a real-life Case Study! ARV Drawing on years of home flipping expertise, we’ve established a method that enables us to present fair cash offers to homeowners. The process begins with calculating the After Repair Value (ARV) of the property, which is an estimate of the value after all necessary improvements and upgrades are made. We then deduct the projected cost of the renovations, the selling expenses (including commissions and closing costs), and our intended profit margin, which tends to be around 10% of the ARV.
Our profit may seem substantial to some, but it’s essential to sustain our business and to continue assisting homeowners. We’ve found that unexpected complications often emerge during renovations, underscoring the importance of a contingency fund for unforeseen expenses. To help you grasp our formula, let’s delve deeper. The ARV is the projected value of the home after all required repairs and upgrades are made. The rehabilitation budget encompasses the projected cost of these renovations. Selling expenses cover commissions, closing fees, and taxes, which we generally estimate to be around 10% of the property’s value. Our target profit margin also represents about 10% of the ARV. Transparency is a key tenet of our approach, which is why we ensure our cash offer is free from hidden charges or commissions.
We aim to offer a fair and honest solution for homeowners seeking to rapidly and efficiently sell their property. You might question why we target a 10% profit margin. The answer is that renovations often encounter unforeseen challenges, necessitating a contingency fund for unexpected costs. Despite having a set profit target for each project, we acknowledge that not all renovations go smoothly. We’ve dealt with unexpected hurdles in the past, but our extensive experience has equipped us to manage such situations. Our cash offer is precisely what it sounds like – the amount we can provide for your property, at a closing date of your choosing. We value transparency, which is why we don’t include any hidden costs or commissions. Our aim is to provide a simple and stress-free solution for homeowners who wish to sell their property swiftly and without hassle.