The 20-minute pass
The point of a fast underwriting pass is not to make the decision. The point is to decide whether the deal deserves the next hour of your time. Twenty minutes with comps, an ARV number, and a conservative rehab guess is enough to sort a live auction property into "kill," "study more," or "worth an inspection." Everything below is that pass.
The investor's timeline
A typical residential auction is marketed 30 days. You need to be underwritten in the first three, inspected in the first two weeks, and lender-confirmed by day 21. That leaves the final week for walk-throughs, comp verification, and setting your maximum number.
Investors who wait until the last week are almost always the ones who either overpay or lose to a more prepared bidder. The 20-minute pass exists so you can filter fast.
Step 1: Comparable sales analysis
Answer one question: at post-rehab condition, what does this property sell for today? Not last year, not projected. Today.
- Pull the last six months of sold comps within a half mile.
- Filter to the same bedroom count, bath count, and size within 20%.
- Weight comps closed inside 90 days most heavily.
- Note the average, median, and range. Use median as your working ARV.
- Flag any outliers and understand why they sold high or low.
Step 2: Acquisition cost assessment
Your acquisition cost is not the hammer price. It is the hammer plus buyer's premium plus closing costs plus any lender points and any pre-close holding. Build the full number:
- Hammer price: your working maximum bid.
- Buyer's premium: usually 5 to 10 percent. See what is a buyer's premium.
- Closing costs: title, transfer, recording, prorations. Budget 1 to 2 percent.
- Lender costs: origination points, appraisal, fees. Get real numbers from your loan officer.
- Pre-close holding: if you are floating cash on earnest money, count the opportunity cost.
Step 3: Rehab budget
Walk the property with a contractor if possible. If time forces you into a solo walk, use a standard per-square-foot band for your market and confirm with a bid before auction day.
- Room-by-room note: paint, floor, trim, fixtures, doors.
- Kitchen: cabinets, counters, appliances, plumbing.
- Baths: vanity, tub/shower surround, tile, toilet, plumbing.
- Systems: roof age, HVAC age, water heater, panel, service lines.
- Exterior: siding, windows, gutters, driveway, landscaping.
- Contingency line: add 10 to 20 percent for the surprises.
Step 4: After-repair value (ARV)
Your ARV is the median of your best three post-rehab comps. If you have to reach for outlier comps to justify the number, the deal is already telling you something. Be conservative.
Step 5: The hold/flip decision
Quick math on both paths:
- Flip: ARV minus selling costs (7 to 10 percent) minus rehab minus holding minus acquisition = projected profit. Target at least 15 to 20 percent of ARV as profit for a flip to be worth the execution risk.
- Hold: monthly rent minus vacancy allowance minus operating expenses minus debt service = monthly cash flow. Target positive cash flow from month one and a defensible cash-on-cash return.
For a full comparison see flip vs. hold: auction edition.
Step 6: Financing and timeline
Can you actually close inside the auction's stated window? Cash and hard-money buyers close quickly. Conventional and DSCR buyers need their lender confirmed before they register. See can I finance an auction purchase for the mechanics.
Common investor mistakes
- Underwriting the bid, not the price. Buyer's premium is real money. Model it every time.
- Rehab guesses instead of bids. A general "$40 a foot" number gets investors into trouble on 1960s-era mechanicals and unpermitted additions.
- Chasing comps. If the deal only works with the highest recent sale as the ARV, it does not work.
- Ignoring the buyer pool. An absolute auction on a well-marketed property attracts strong bidders. Do not expect a steal.
- Skipping the inspection. The savings are never worth the surprise. Always inspect before the top of your bid.
The bid strategy
Set your maximum number before the auction opens. Write it down. Include the buyer's premium in the number. Your maximum is the price at which the deal still meets your return threshold with a contingency for surprises.
On auction day, bid patiently, in your platform's minimum increments, and stop the moment the price passes your written maximum. There is always another deal.
Questions about underwriting?
We work with investors constantly. If you want to talk through a live Pasker deal (comps, condition, timing, or financing) reach out before auction day.
Frequently asked questions
How fast do I really need to underwrite?
Fast enough that you have time to inspect, verify title, and confirm financing before auction day. On a 30-day marketing window, a working underwriting model should be done in the first 72 hours.
What is the biggest number investors miss?
The buyer's premium. A 10 percent premium on a $150,000 hammer is $15,000 that comes straight out of your deal spread. Always underwrite the all-in price, not the bid.