The 60% rule. Establish the average / retail value first from comps, then take 60% of that average — not 70%. As Joseph puts it: "70 is tight. In most homes that are average and below, your AC is going to cost the same, your roof, your plumbing — and that all adds up. And you haven't even done holding costs and profit for the investor."
The back-out formula. The longhand version of the same idea — start at the move-in-ready value and subtract every cost the next buyer has to carry:
The $30K estate roof contingency. On an estate / as-is property, a known big-ticket repair gets subtracted up front — "we'll sell it to you for $30,000 less, with the understanding that the roof needs to be repaired." The cost-to-cure comes off the average before the offer is set.
The buyer ranking. There are really only two buyers on a problem property, and they rank like this:
1 · Investor Flip — most likely 2 · Investor Buy-Hold 3 · Owner-Occupant — rare
Owner-occupants are rare because a lender can't underwrite a "problem child" in hoarder/dated condition — it has to be all cash, and few owner-occupants can pay cash and house themselves through a full rehab. That forces the most-likely buyer to be a cash investor.
The whole analysis lives between two anchors: what the house is worth as it sits (hoarder + dated), and what it's worth fully renovated (move-in-ready). Everything in between is a bridge — cost to cure, and the value it unlocks.
| Condition | Cost to cure | Resulting value |
|---|---|---|
| AS-IS — hoarder + dated | $0 | $380K – $440K |
| + Cleanout / cosmetic (paint, carpet, fixtures) | $13K – $45K | $400K – $475K |
| + Moderate update (kitchen / baths / flooring) | $33K – $75K | $475K – $549K |
| + Full remodel (all systems: roof / HVAC / plumbing / elec) | $93K – $145K | $564K – $614K |
| MOVE-IN-READY / ARV | (full) | $564K – $614K |
A mandatory hoarder cleanout ($8–20K) is included in every tier — the house has to be cleared before any work begins, which is why the as-is value sits below the 2025 assessed market value of $420,581. Renovation tiers scaled from Joseph's remodel matrix for a 2,967 sqft 2-story (vs. a 2,000 sqft baseline).
60% cross-check: 60% × area median $485K = $291K — right inside the band. The detailed back-out lands just under the plain 60% rule because the hoarder cleanout is an extra subtraction the shortcut doesn't carry.
Same cash purchase, but the investor rents it as-is instead of reselling — so there's no flip profit or sell cost to remove, and the holding burden is lower. Rent / cap-rate supported, which lets it sit above the flip offer.
Pays near as-is condition value (anchored to the dated-comp evidence) and captures the renovation upside themselves. Scarce because no lender will underwrite a hoarder — must be all cash plus somewhere to live during the rehab. When one does appear, they're the top-dollar outcome.
Greatwood solds (2.4–3.4K sqft, last 180 days) bracket the two anchors. The dated comps establish the as-is floor; the updated comps establish the renovated ARV — and the subject (2,967 sqft) is larger than the $485K median home, so its renovated retail sits above the median.
| Comp set | $/sf band | Implied value (2,967 sf) | Anchors |
|---|---|---|---|
| Dated comps (original condition) | $121 – $148 / sf | $359K – $439K | AS-IS floor |
| Median sold (all matched) | ~$179 / sf | ~$485K area median | market middle |
| Updated / renovated comps (top) | $190 – $207 / sf | $564K – $614K | ARV / move-in-ready |
Reference only: 2025 tax assessed market value $420,581. Sources: PropertyDetails + HAR Quick CMA 847833 + Greatwood sales CSV (4,954 rows), Lamar CISD.