This house flipping offer checklist will make sure you cover every step in the process of writing an offer, including the documents that are often required.
After you’ve done your first pass due diligence and reviewed the condition of the property, to make sure that the flip is still a worthwhile purchase, it’s time to check off the items in the offer stage of a fix and flip property purchase.
Run preliminary title check
If you are buying off-market, always check the title for any potential issues. You can either have your title company perform a preliminary abstract, or do it yourself by going to the records office and taking a look at the chain of title.
Understand the value of the property
Analyze similar rehabbed comps that have been adjusted, by finding comps and determining the After Repair Value of the property.
Understand motivation of seller
When preparing your offer, keep in mind the motivation level of the seller. Find out how invested they are in selling the property by asking why they want to sell and how fast they want to close. In many cases you’ll be able to find the amount owed and estimated equity on those loans in REI/kit House Flipping Software.
Understand the rehab estimate
Examine the construction costs and real estate rehab amount you came up with after inspecting the property.
If helpful, check off items in this checklist for reviewing the flip property condition.
Determine your max offer price
Based on your rehab estimate and your purchase, sale, and holding costs, calculate your max offer price, taking your desired profit into account.
A strong clean offer will have few contingencies, be all cash, and close quickly. Make sure to at least have an inspection contingency to allow you to get solid contractor’s bids and back out if necessary. Compare the bids to the itemized construction cost estimate that you came up with in the REI/kit rehab cost estimator.
Provide proof of funds letter
Either a recent bank statement showing an adequate balance, or a letter from your lender will be sufficient. Make sure that the name in which you will take title, such as the LLC name for example, matches the name on the letter or the statement.
Provide earnest money deposit
Provide the minimum amount that you think will be adequate to show serious intent to purchase.
Provide LLC documents
At the very least you’ll need your articles of organization, and EIN. In some cases you may need a resolution giving you authority to perform the transaction.
Perform Final Due Diligence
If your offer has been accepted, use the Final Due Diligence Checklist to determine if there are any issues with the property that are grounds to renegotiate or cancel the offer altogether.