How days on market change a flip offer

Days on market change a flip offer only after you turn them into a month count. The month count changes the holding line. The increase in that line comes off the purchase price. The percent itself does not move, and a price cut is not holding. This page uses the same $200,000 after-repair value, $40,000 rehab, and $94,000 starting offer as the other guides, so you can check each step by hand. The dollars are a worked example. They are not a closed sale and not a city statistic.

Count months from the comps, not from a city rate

The flip projection stores one whole number of months from purchase to resale. The default is 6. That 6 is not a market report. It is the hold you typed. Before you read days on market, split the 6 into the part that is work and the part that is the listing. In this example the split is 3 months of rehab and 3 months to get under contract. Three listing months are 90 days. You replace the 3 when your own scope is longer or shorter. The report does not store the split. It stores the total.

Days on market, here, means the days those resale comps sat before they went under contract. Use the sold comps you already accepted for the after-repair value. How to pull comps for a house flip is the recency, distance, and similarity weight behind that set. Read the days off that set. Do not replace them with an absorption rate for the city, the zip code, or the metro. This page does not have one. A citywide average is not the month count for the house you are buying, and inventing one would make the offer look researched when it is only a guess.

If those comps went under contract in about 90 days, the 3-month listing budget already matches them. Leave the month count at 6. If they took about 180 days, the listing leg is 6 months, not 3. The new month count is 3 months of work plus 6 months of listing, which is 9. Use 30 days as one month only because the projection will not take a fraction. 180 divided by 30 is 6. When the days do not divide evenly, round the listing leg up to the next whole month and say so. A 100-day listing leg is 4 months in this worksheet, not 3.33. Rounding up is a choice you can show. It is not a rate.

The days the subject house has already been listed are a different clock. They do not add months to the hold you will have after you buy. They do not create a second discount. A stale listing can tell you the seller has waited. The lower price below is still the whole offer. You do not take another percent off because the current listing looks old.

The new holding line

Holding stays 0.5 percent of the purchase price for each month. A longer listing changes the month count, not the percent. The holding-cost guide prices one extra month at that 0.5 percent and keeps price concessions on the sale-price line. Start from the offer you already have, before you cut it. On $94,000:

• One month is $94,000 × 0.005 = $470.
• Six months is $94,000 × 0.005 × 6 = $2,820.
• Nine months is $94,000 × 0.005 × 9 = $4,230.

The new holding line is $4,230. The increase from the six-month default is $4,230 − $2,820 = $1,410. That $1,410 is carry. It does not change the after-repair value. The 3 percent holding reserve inside the offer is also unchanged. On a $200,000 ARV that reserve is still $6,000. It is not a per-month charge, and a longer listing does not enlarge it. The MAO calculator has no days-on-market field. It will still name $94,000 from a $200,000 ARV and $40,000 rehab. The $1,410 adjustment is a step you do after that number, on paper.

If you leave the purchase price at $94,000, the extra $1,410 comes out of profit. The fix and flip profit guide shows $48,360 of profit at six months on this example. Nine months at the same price would spend $1,410 of that profit and would not change the ARV. The purchase price is the lever you actually control, so the next step takes the $1,410 off the offer instead of waiting to discover it as a thinner profit.

The lower purchase price

Subtract the increase in the holding line from the starting offer. $94,000 − $1,410 = $92,590. That is the new purchase price for this worksheet. Then recompute every line that uses the purchase price. A lower price reduces the price itself, 3 percent of that price, and 0.5 percent of that price for each of the 9 months. Leaving buyer closing and holding on the old $94,000 would mix two offers in one column.

• Buyer closing is 3 percent of $92,590, which rounds to $2,778.
• Holding for 9 months is $92,590 × 0.005 × 9, which rounds to $4,167.
• Seller closing stays 6 percent of the $200,000 ARV, which is $12,000. The listing ran long. The ARV did not.
• Total investment is $92,590 + $40,000 + $2,778 + $4,167 = $139,535.
• Net proceeds are $200,000 − $12,000 = $188,000.
• Profit is $188,000 − $139,535 = $48,465.
• ROI is $48,465 / $139,535, which the one-decimal rounding reports as 34.7 percent.

The six-month worksheet at $94,000 reports $48,360 and 34.6 percent. Paying $92,590 and holding 9 months reports $48,465 and 34.7 percent. Profit is $105 higher because two lines shrink with the price. Buyer closing falls from $2,820 to $2,778, which is $42. The 9-month hold on $92,590 is $4,167, which is $63 less than the $4,230 you subtracted from the old price. $42 + $63 = $105. You already removed the $1,410 once, when you cut the offer from $94,000 to $92,590. Do not subtract $1,410 again from the $48,465. Do not add the old $2,820 hold to the new $4,167 hold. The worksheet uses one purchase price and one month count.

A price cut is not another month

If the comps reached a buyer only after the seller cut the price, that cut belongs on the sale price. It is not another month, and it does not go inside the 0.5 percent. Suppose the sold prices support $190,000 rather than $200,000. Feed $190,000 to the offer formula as the after-repair value. The profit reserve is 25 percent, $47,500. The closing reserve is 5 percent, $9,500. The holding reserve is 3 percent, $5,700. Rehab is still $40,000. The maximum allowable offer is $190,000 − $40,000 − $47,500 − $9,500 − $5,700 = $87,300.

That $87,300 is a lower purchase price caused by a lower ARV. It is not the $1,410 holding adjustment. Do not add the $10,000 reduction to the $4,167 holding line. Using both the lower ARV and the extra months is allowed only when both things are true: the sold prices are really $190,000, and the days on those comps really support 9 months. Change the ARV, recompute the offer, then apply the month-count steps to that new offer. Adding the two cuts in your head is how the same dollars get counted twice.

Seller closing in the profit worksheet is 6 percent of the ARV you give it. If you know the resale will be $190,000, put $190,000 in that slot for the worksheet. Do not leave $200,000 in the formula and also subtract $10,000 as if it were holding. One sale price, one holding line.

What the 0.5 percent still leaves out

The 0.5 percent line stands in for taxes, insurance, utilities, and similar carry. Interest on a hard-money or private loan is not inside it. A longer listing does not move interest into the percent. If you are borrowing, each extra month has an interest bill you add yourself, on its own line, and that bill can also come off the purchase price. Label it as interest so a reader can see it is not the $470.

If you already have a quoted monthly bill above $470, use the quoted bill times the new month count instead of 0.5 percent. Subtract the increase from the purchase price the same way: new bill times 9, minus the six-month holding line you were using, and that difference comes off the offer. Then recompute buyer closing from the new price. The report will still draw 0.5 percent on its flip card. Your offer is allowed to be stricter when the premium is in hand.

If you have not counted the days on the comps, leave the month count at 6. A blank is more honest than a metro average this page will not invent. Copying a days-on-market figure from a different city has the same problem as copying a tax bill from that city. The percent can travel. The days cannot.

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