Making Offers

How an offer is built

An offer is not a guess. It is three numbers combined in a fixed order:

1. ARV: what the home is worth after repairs (see Underwriting 101).
2. Repairs: the planning estimate from the Narqix rehab table (see Repair Estimating).
3. The margin: what the end buyer needs for costs and profit, plus the client's fee.

Work in this order every time: repairs, then ARV, then MAO, then the offer range.

The buyer's number first

Our client usually does not keep the house. A cash buyer (a flipper or a landlord) does. So we start by asking: what is the most a typical cash buyer will pay?

The common rule in US investing:

Buyer's maximum = (ARV × 70%) − repairs

Why 70%? The remaining 30% of the ARV covers the buyer's purchase and sale closing costs, agent fees when they resell, loan costs, insurance, taxes and utilities while they hold the house, and their profit for the risk.

Choosing the percentage

Market and deal	Percentage to use
Normal market, normal rehab	70%
Slow market, heavy rehab, lower-value area, or low ARV confidence	65% (safer)
Fast market, high-value area, light rehab, strong buyer demand	75%, and only with the client's approval

The MAO (our walk-away number)

MAO = (ARV × percentage) − repairs − the client's fee

The client's fee is the assignment fee (or the spread on a double close). It is set by the client. When the client has not set one, Narqix plans with 10K to 15K as a starting assumption and confirms with the client before any offer.

The MAO is the highest price we can agree with the seller. It is not the opening offer.

Assignment fee: how to think about it

• In an assignment, the client signs a purchase agreement with the seller, then assigns (transfers) its rights in that contract to the end buyer. The buyer pays the client an assignment fee. On most settlement statements, this fee is visible to all parties.
• In a double close, the client buys the house from the seller and resells it to the end buyer, usually on the same day, often using short-term transactional funding (commonly about 1% to 3% of the price). The client's profit is the difference between the two prices, minus both sets of costs.
• A fair fee rewards the client for finding, negotiating and managing the deal. A fee so large that no buyer will pay the price kills the deal.
• Many states now require clear written disclosure to the seller that the contract may be assigned or that the buyer intends to resell for more. See Calling Compliance for Real Estate.

The offer range

Do not open at the MAO. Leave room for honest negotiation. Narqix plans three numbers:

Number	How to set it	Purpose
Opening offer	About 10% to 15% below the MAO	Where the conversation starts
Target	About 5% to 7% below the MAO	Where most deals should land
Walk-away (MAO)	The MAO	Not one dollar higher without client approval

When the seller is clearly motivated and the price they asked is already close to the target, it is fine to offer at or near the target. Lowballing a fair seller to "test" them damages trust.

Worked examples

Example 1: Full Cosmetic ranch (standard method)

From the Underwriting 101 and Repair Estimating pages: 1,450 sqft, ARV 250,000, Full Cosmetic repairs 50,000, normal market, client fee 15,000.

Step	Calculation	Result
Buyer's maximum	250,000 × 70% − 50,000	125,000
MAO	125,000 − 15,000	110,000
Opening offer	About 13% below the MAO	95,000
Target	About 6% below the MAO	103,000
Walk-away	MAO	110,000

The seller asked 165,000. The acquisitions manager explains the numbers, opens at 95,000, and the parties agree at 103,000. The client assigns the contract to a buyer at 118,000. The client's fee is 15,000; the buyer is at 118,000, which is under their 125,000 maximum.

Example 2: Easy house in a slower, lower-value area

900 sqft, ARV 140,000, Easy repairs 10,000, slow C-class market, client fee 10,000.

Step	Calculation	Result
Buyer's maximum (65%)	140,000 × 65% − 10,000	81,000
MAO	81,000 − 10,000	71,000

Example 3: Full Gut, larger house

2,200 sqft, ARV 380,000, Full Gut repairs 100K to 120K (seller clear and specific, so use the middle: 110,000), normal market, client fee 15,000.

Step	Calculation	Result
Buyer's maximum	380,000 × 70% − 110,000	156,000
MAO	156,000 − 15,000	141,000

The rental check (for landlord buyers)

In B and C class areas, the end buyer is often a landlord who thinks in rent, not ARV. Use this check alongside the 70% method, and use the lower result unless the client says otherwise.

Class rent factor: A = 0.005, B = 0.01, C = 0.025

Total investment a landlord will accept = monthly market rent ÷ class rent factor

Contract price = total investment − repairs − the client's fee

Market rent is the average of 3 similar rentals nearby.

Example	Calculation	Result
B-class, rent 1,450 per month, repairs 30,000, fee 15,000	1,450 ÷ 0.01 = 145,000; then 145,000 − 30,000 − 15,000	100,000
C-class, rent 1,100 per month	1,100 ÷ 0.025	44,000 total investment

The C-class result shows why landlords pay much less in lower-value areas: they take more risk with tenants, repairs and vacancies, so they need the house to cost far less compared with the rent.

When cash is not enough

If the seller needs more than the MAO, there may still be a solution. Never invent one; escalate to the client, who decides whether to offer:

• Retail Partnership Option (novation-style): the client partners with a licensed agent to sell the home to a retail buyer, often after repairs, and the seller nets an agreed amount. Longer timeline (often 60 to 120 days), access needed. Best for good-condition homes in good areas.
• Seller financing: the seller is paid over time instead of all at once. Usually for owners with no mortgage.
• Subject-to: the buyer takes over payments on the existing mortgage, which stays in the seller's name. Carries real risks for the seller and must be fully explained and reviewed by the client's counsel.

These are explained in the Real Estate Glossary. The client's counsel and title company must approve the paperwork.

Writing the offer email

Send a written offer after the offer conversation (never instead of it, unless the seller asked for email). Keep it short, warm and factual. Edit every template to fit the real situation, and replace every purple placeholder with the real details before sending.

Template 1: Partly updated or renovated home

Subject: Our cash offer for (PROPERTY ADDRESS)

Hi (SELLER NAME),

Thank you for taking the time to walk me through the property today. It is clear you have put real care into it, especially (UPDATES THE SELLER MENTIONED).

We compared the home with recent sales of similar updated homes nearby and looked at the work that still remains, mainly (REMAINING REPAIRS). Based on that, (COMPANY NAME) would like to offer (OFFER AMOUNT) for the property as-is.

What this includes:

• We buy as-is. You do not need to repair or clean anything.
• We cover the normal closing costs. There are no agent commissions.
• You choose the closing date, within (CLOSING WINDOW).
• A licensed title company handles the closing and the payment to you.

If this works for you, I will send the purchase agreement and go through it with you line by line. If you have questions, or want to talk through the numbers, I am happy to call at a time that suits you.

Kind regards,

(YOUR NAME)

(COMPANY NAME)

(PHONE NUMBER) · (EMAIL ADDRESS)

Template 2: Dated home that needs work

Subject: A simple, as-is offer for (PROPERTY ADDRESS)

Hi (SELLER NAME),

Thank you for speaking with me about (PROPERTY ADDRESS). I understand that (SELLER'S SITUATION IN ONE SHORT PHRASE), and I want to make this as easy for you as possible.

(COMPANY NAME) buys homes in their current condition. Based on recent sales nearby and the repairs the home needs, we can offer (OFFER AMOUNT).

• No repairs, cleaning or showings.
• Leave behind anything you do not want to take.
• We cover the normal closing costs, with no commissions.
• Close on the date that works for you, within (CLOSING WINDOW).

There is no obligation. If you would like to see how we reached this number, I can send you the recent sales we used. Just reply here or call me.

Kind regards,

(YOUR NAME)

(COMPANY NAME)

(PHONE NUMBER) · (EMAIL ADDRESS)

Template 3: Follow-up after the seller said "let me think"

Subject: Following up on (PROPERTY ADDRESS)

Hi (SELLER NAME),

I hope your week is going well. I wanted to follow up on our conversation about (PROPERTY ADDRESS). Our offer of (OFFER AMOUNT) is still available until (OFFER EXPIRY DATE).

If anything is unclear, or if your plans have changed, I am glad to talk it through. And if now is not the right time, that is completely fine. Just let me know.

Kind regards,

(YOUR NAME)

(COMPANY NAME)

(PHONE NUMBER)

Before you send any offer: checklist

• ARV set with the Narqix Golden Standard, confidence rating noted.
• Repair tier and estimate noted, with any red flags.
• Percentage chosen and justified (65%, 70% or 75%).
• Client fee confirmed.
• MAO, opening offer and target calculated.
• Rental check done for B and C class areas.
• Client approval obtained if your campaign requires it.
• All decision makers included.
• Market Compliance Card ready for the state.

Check yourself

1. Write the MAO formula.
2. When would you use 65% instead of 70%?
3. ARV 200,000, repairs 40,000 (Needs Work), fee 12,000, normal market. What is the MAO?
4. What are the three numbers in the Narqix offer range?
5. A B-class rental would rent for 1,200 per month. Repairs 20,000, fee 10,000. What contract price does the rental check give?

Answers

1. MAO = (ARV × percentage) − repairs − the client's fee.
2. Slow market, heavy rehab, lower-value area, or low ARV confidence.
3. 200,000 × 70% = 140,000; minus 40,000 = 100,000; minus 12,000 = 88,000.
4. Opening offer, target, walk-away (MAO).
5. 1,200 ÷ 0.01 = 120,000; minus 20,000 minus 10,000 = 90,000.

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