How your numbers are worked out
The pad on the front page writes the math out the way you would on scratch paper. Here is what each line means.
Your max offer
The most you can pay and still leave your buyer a deal worth taking. Start with the ARV, then take away what the buyer needs and what the house needs.
The 30% split
Your buyer pays 70% of the ARV. The other 30% is theirs to cover costs and earn a profit. At the defaults it splits like this:
- 8% for closing and selling.
- 5% for holding the house, about a year.
- 17% is the buyer's profit.
You can change the 8% and the 5% under “More numbers”. Whatever is left of the 30% is the buyer's profit.
Why 70% is a floor, not a rule
70% is a common starting point for what a buyer pays. Your buyers and your market set the real number, so move the slider to match them. Above 75% most cash buyers pass.
Buyer's profit
This is your buyer's margin. The owner checks a tight deal this way: the buyer nets at least 15% of the ARV, and on a fixer-upper (repairs of 10% of the ARV or more) the buyer's profit is at least the rehab, dollar for dollar. Whether a house is a fixer-upper is your call. The tool ticks the Fixer-upper box for you when repairs are 10% of the ARV or more, as a starting estimate, and you can tick or untick it. The pad flags a deal that misses the rule.
Your walkaway
Your max offer rounded down to the nearest $10, and never a round hundred. It is the number you do not go past on the call.
The offer ladder
Open at 65% of your walkaway, then 85%, then 95%, and stop at your walkaway. Smaller steps tell the seller you are near your limit. Tick each offer once you have made it.
The 70% rule check
The classic shortcut: ARV times 70%, minus repairs, minus your fee. It is shown as a second opinion. It leaves out closing and holding costs, so the pad can come out lower.
Check the payoff first
If the mortgage payoff is above your walkaway, the offer cannot close unless the lender agrees to a short sale. Ask for the payoff early.
About the repair prices
The estimate multiplies square feet by a price for how much work the house needs, then adds the big items you tick. The prices per square foot are starting estimates too: ranges to adjust to your market and check on the walkthrough, not quotes.
Estimates to check, not advice.