What is a good offer price for off-market?
How to Determine Your Offer
Start by calculating the property's after-repair value (ARV)—what it would sell for in good condition. Then subtract estimated repair costs and your desired profit margin. A common investor formula is ARV x 70% - repairs = offer price. This accounts for holding costs, closing fees, and profit.
If you're an owner-occupant, you might offer closer to market value but adjust for condition and needed updates. Off-market deals often have less competition, so you can negotiate a better price, but don't assume the seller will accept a deep discount. Their motivation and timeline play a big role.
- Calculate ARV using recent comparable sales
- Estimate repair costs accurately
- Use the 70% rule for investor offers
- Adjust for seller motivation and market conditions
Factors That Affect Your Offer
The seller's situation matters: if they're facing foreclosure, inherited the property, or need a fast sale, they may accept less. The property's condition, location, and local market demand also influence what's reasonable. In hot markets, off-market deals may still command near-market prices.
Always get a professional inspection or contractor estimate before finalizing your offer. Your initial offer can be based on estimates, but you should have a contingency to renegotiate if repairs are more extensive than expected.
- Seller's urgency (foreclosure, inheritance, job relocation)
- Property condition and needed repairs
- Local market demand and inventory
- Your own investment goals and profit margin
Common mistakes
- Using a one-size-fits-all formula without considering local market conditions.
- Underestimating repair costs, which eats into your profit.
- Assuming off-market always means a deep discount; seller motivation varies.
