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How Sundae Calculates Your Offer

May 29, 2020 | Team Sundae Team Sundae

This guide walks you through how Sundae calculates a real-time, no-obligation cash offer to buy your house as is.

Determining the dollar amount Sundae can offer you for your house involves a careful valuation process that we’ve developed from our extensive real estate experience. To land on an accurate estimate, our team of real estate and local market experts uses a combination of data, geolocation tools, and an on-site visit.

Read this guide for a walkthrough of the steps we follow to create your offer, with details on the team, key components that go into the offer, and what happens after an offer is made. Through the entire offer process, we maintain a focus on you, the seller, and what is best for your needs. 

 

In This Guide

  1. Overview of the Sundae Team Members
  2. Step 1: The Initial Valuation
  3. Step 2: The Appointment
  4. Step 3: The Real Time Offer
  5. Step 4: The Contract
  6. Step 5: What Happens Next

 


Overview of the Sundae Team 

Sundae team

If you’re thinking about selling your house to Sundae, there are three components of our team who will play a key role in giving you a great offer price: 

  1. Customer Advisor (CA) – This is the first team member that a customer speaks with, usually by phone. The CA’s goal is to provide you with information on the Sundae process and to collect basic details about your property. If both parties agree to continue the conversation, the CA will schedule an on-site appointment.
  2. Market Expert (ME) – The Market Expert is an on-the-ground local real estate professional with extensive valuation and construction knowledge. The ME meets with you at your home, tours your house, and composes a real-time, in-person cash offer at the time of the appointment. If you like the offer, the ME can write up the contract on the spot. Or, they’ll leave you with a copy to review with family and friends. MEs are happy to provide guidance and discuss other options, as well. Their work also involves pre-appointment research, such as reviewing comparable properties and visiting the neighborhood.
  3. Sundae HQ Team – Sundae is backed up by a support staff of experienced professionals who help out with activities ranging from valuations analysis, construction estimates, coordinating closing, and other administrative functions. Our goal is to make everything as simple and convenient as possible for customers, so if something needs to be done in the sales process, we will handle it. This team’s extensive collective experience and access to industry-leading technology ensure you’re given the highest possible offer for your house when selling off-market. 

Step 1: The Initial Valuation

After you submit your information to Sundae, a Customer Advisor will get in contact to collect info, explain a bit more of our process and, if you’re interested in moving forward, schedule an appointment. At this point, we immediately get to work preparing an initial valuation estimate. This is a preliminary estimate of the value of your property derived from the following factors: 

  • Information gathered during call with CA
  • Comparable sales (“comps”)
  • Market trends
  • Construction estimate

comparables illustration

Importance of comps

Once we have the CA’s notes and an appointment on the books, we assign a Market Expert to research your immediate neighborhood, starting with finding comps similar to your house that have recently sold on the market.

For a nearby house to be considered a comp, it must meet three criteria:

1. Same major defining characteristics (i.e. size, floors, rooms, and style)

2. Similar external influences (i.e. location, neighborhood, geographical features)

3. Similar anticipated condition post-rehab

By looking at the closing prices the comps sold for, the Market Expert can get a rough idea of what your house would be worth after updates.

Market trends

Market Experts also research trends in market conditions. These include how quickly houses are selling and the amount they are selling for relative to their listing price. Market trends help determine what the current demand for houses might be. When demand is high, prices tend to be higher. When demand is low, prices are lower. 

Learn more: How to Know if It’s a Seller’s Market

Together, the area’s comps and market conditions help determine the After Repair Value (ARV) of your house. The  ARV is an estimate of what your house may sell for after everything is restored, repaired, updated, cleaned, and made available on the market. 

Construction estimate

Of course, having the ARV is one thing. But Sundae must also estimate what it will cost to do the renovations necessary to get there. As part of creating your initial valuation, our team begins to list what repairs and upgrades may be needed to add optimum value to your house. 

Our team of market experts, project managers, and interior designers have collectively budgeted and managed thousands of home renovation and construction projects. They understand not only construction itself, but the planning and preparation required to complete a job within budget and timeline. This includes considerations like local permitting, availability of materials, disposal regulations, and where to find the right contractors. 

Further reading: Interior Design the Sundae Way 

Step 2: The Appointment

The Sundae ME Appointment

Led by the ME, Sundae prepares the initial valuation estimate in the days leading up to your on-site appointment. During the appointment itself, the Market Expert visits your house and combines all the relevant background data with nuts and bolts observations from the property ground. This step is a critical component of creating a fair and accurate offer.

Sundae’s Market Experts have years of real estate experience and a wealth of knowledge about their local area. This means you can count on them to have insights on what’s in demand in your neighborhood. The ME’s knowledge also helps the Sundae team understand how potential buyers might respond to your house.

The appointment lasts about two hours. During this time, the ME will meet with you face-to-face to discuss your situation and learn more about your property. Here is what you can expect a Market Expert to do at the appointment:

  • Confirm on-file property characteristics
  • Complete a 36-question survey with you, the owner
  • Tour the property and take between 60 and 80 photos

 

By capturing photos of your house’s layout and details of the interior, the Market Expert collects the necessary ingredients used by the rest of the team to make a fair and accurate estimate about what work may be needed on your house. 

Related: Should I Remodel Before Selling?

Aside from gathering information, the other crucial part of the ME’s work is getting to know you, the seller. You and your family’s unique circumstances, needs, and timeline are just as important as the details of your house. Sundae’s goal is not just to give you a fair offer, but also to provide an experience that delivers on what’s most important to you during this time of transition.

Step 3: The Real-Time Offer

After completing all necessary steps in the appointment, the ME will head out to their car and do the work necessary to finalize Sundae’s real time offer.

At this point the ME assembles all the key pieces of information collected throughout the process and discusses the offer price. As necessary, the ME may get on the phone with the Sundae HQ Team to discuss numbers and options. This step in the process takes about 30 minutes. 

During this time, the ME will finalize a Scope of Work (SOW) based on their initial estimate and the photos and information gathered during the appointment. The SOW will outline repairs, construction, or remodeling needed to bring the house to top-of-market condition. Our goal is to define which projects will add meaningful value to your house, and project accurate cost estimates and timelines for completing those projects.

Learn more: Best and Worst Home Renovations

Once the SOW is completed, Sundae has all necessary inputs needed to create your offer. These include:

  • Learnings from your appointment with the Market Expert
  • Cost of repairs and renovations from the the SOW
  • Your house’s projected ARV

 

Finally, the ME decides how to use all the project details to come to a fair offer that recognizes your specific situation, what’s important to you, and what your needs are financially.

 

Step 4: The Contract 

The next step is to present the cash offer to you, on the spot. If you decide to accept it, the ME can draw up the paperwork and you can sign immediately via DocuSign. MEs can also leave you with a hard copy or email you an electronic version so you can take some time to review it with your family and loved ones.

Read more: How to Calculate Net Proceeds From a Home Sale

Sundae aims to be efficient with the entire process so we can get you an offer quickly. But we will always take extra time if needed to explore ways we can save costs and give you the best possible outcome. We also strive to be accurate so that no changes will be made to this offer, even after a full home inspection (which comes later). In fact, Sundae currently sees changes made to our offer price in less than 10% of all contracts.

Remember, Sundae can offer more for your house because we have a different way of doing business than others who buy houses off market. We’re willing to earn less per transaction than our competitors, and we can afford to do this because of our scale and efficiency. 

For homeowners trying to evaluate how to sell their home, Sundae’s objective is to help and advise on that decision. Our home assessment, SOW for necessary repairs, and the offer are provided free of charge. We want to empower sellers with all of the information needed to make the best decision. If you decide not to take our offer, that’s no problem. We will still be happy to help you understand your options.

Also consider: How 3 Sundae Customers Evaluated Home Selling Options 

Step 5: What happens next? 

Once you sign an offer with Sundae, the process isn’t done yet. There are still a few more steps you’ll want to be aware of. 

Escrow

When a contract is signed, we open an escrow account. Escrow is a licensed third party that helps us complete the sale of the property. Escrow will gather documents from all parties, collect funds, and distribute proceeds. 

Title

We also use a third party title company to research the history of the property and discover all liens recorded against it. This group will make requests from the seller if it has any questions while researching. The title company will also record the transfer of the deed with the official county records department when escrow advises it.

Paperwork

After we open an escrow account, the Sundae HQ team will reach out to go over all necessary disclosures from you as the seller. Escrow will also be in touch with any questions they may have for you. When escrow and title are ready, the closing team will provide all paperwork for signatures via a mobile notary. 

Inspections

We will perform a third party home inspection. The inspection typically takes up to four hours and will be performed by a licensed home inspector. The home inspection helps our construction team confirm their initial budget and will also let Sundae know of any issues that might have been missed by the ME during our initial appointment. But don’t worry, we discover issues that can alter the offer price in less than one out of every 10 inspections.

Note: Once the inspection is complete, you will also have the option to receive a $10,000 cash advance from Sundae to help you move. Find out more

Disclosures

Each state requires different disclosures to be signed by both the buyer and seller during a real estate transaction. Our closing team will provide these to you for completion and are able to answer any questions you might have during the process. 

Closing 

We purchase most of our properties vacant, but many customers negotiate other arrangements with the ME prior to closing. Once you are able to move out we will do a quick walkthrough to confirm vacancy of the property and then close escrow. You have the option to close in as little as 10 days, or take your time and move up to 60 days after accepting our offer.

Interested in selling your house to Sundae? Contact us today.

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