This "What to Offer on a House" calculator helps you determine a reasonable offer price based on the fair market value of the house, cost of necessary renovations, desired discount, and desired profit (if any).
To calculate the offer price, use the following formula:
\[
\text{Offer} = \text{FMV} - \text{COR} - \left(\frac{\text{DD}}{100} \times \text{FMV}\right) - \text{DP}
\]
where:
\(\text{FMV}\) = Fair Market Value
\(\text{COR}\) = Cost of Renovation
\(\text{DD}\) = Desired Discount (as a percentage)
\(\text{DP}\) = Desired Profit
Let's assume you want to buy a house with a fair market value of $77,000, a cost of renovation of $5,000, and you want a 5% discount. You do not plan to resell the house, so the desired profit is $0.
Step-by-step calculation:
\[ \text{Offer} = 77,000 - 5,000 - \left(\frac{5}{100} \times 77,000\right) - 0 \] \[ \text{Offer} = 77,000 - 5,000 - 3,850 \] \[ \text{Offer} = 68,150 \]
So, you should offer $68,150 for the house.