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The Cowboy Sales Process
The Cowboy Sales Process

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Case Study 3

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Part 1: The Valuation Engine – Forging an Undeniable Market Value

Before you can negotiate, you need an unshakable understanding of the property's After Repair Value (ARV). This is your internal North Star—the number from which all other calculations flow.
Forging an Undeniable Market Value

The Micro-Market Mandate

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Finding Your "North Star" Comp
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Trust, But Visually Verify

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The Adjustment Game & Final ARV

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Part 2: The Investor's Formula – Calculating Your Maximum Offer

With a solid ARV, you can now determine your Maximum Allowable Offer (MAO). This is not what you will offer; it's the absolute ceiling you can pay while still hitting your profit targets.

The MAO Formula

The standard formula accounts for your costs and desired profit margin:
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(ARV×Multiplier)−Estimated Repairs=MAO
ARV ($580,000): The true market value you established in Part 1.
Multiplier (0.90): A standard 90% multiplier accounts for your future closing costs, holding costs (utilities, insurance, taxes), and a minimum profit margin.
Estimated Repairs ($30,000): A placeholder budget. Even in "good condition" homes, cosmetic updates like paint, flooring, and fixtures are often needed to achieve the top-market ARV.
The Calculation:
580,000×0.90=$522,000
$522,000−$30,000=$492,000
Maximum Allowable Offer (MAO): $492,000. This is your line in the sand.
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Part 3: The Low Anchor Gambit – A Masterclass in Negotiation

Your MAO is for your eyes only. The goal now is to anchor the seller's expectations to a much lower number, making your eventual offer seem reasonable, even generous.
A Masterclass in Negotiation

Step 1: Find Your Weapon (The Low Anchor Comp)

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Step 2: Introduce the "Retail Haircut"

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Step 3: Float a Speculative Range (The Anchor Drop)

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Battlefield Summary 🎯

Establish Your ARV: Use the micro-market and North Star comp method to find the truth. This number is for you alone.
Calculate Your MAO: Use the formula to determine your absolute maximum price. This is your walk-away number.
Find the Low Anchor: Locate a lower, but still defensible, comp to use as your negotiation weapon.
Apply the "Retail Haircut": Immediately subtract 10% from the low anchor comp to reframe the seller's mind around their net proceeds.
Drop the Speculative Range: Use a hypothetical low range to pull the seller's expectations down, creating the space you need to negotiate effectively.

If you’re looking for novations, Prexium is where you’ll find the right leads to close more deals. Start today 👉
The Cowboy Marketer
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