Sixty Days To Your First Bargain Purchase
BATTLECALL GUEST EXPERT: Attorney William
Bronchick Of LegalWiz.com
Finding good real estate deals is an art that takes time to master. Like any
business, customers are what drive it. Your primary customer is the seller who
is motivated to sell below market value. Finding motivated sellers requires
advertising, marketing, salesmanship, and, like any business, keeping your nose
to the ground.
Nothing happens and nothing matters in real estate until you find a deal. You
cannot put together a deal without a motivated seller and you can only convince
a motivated seller to do something creative or that involves a discounted price.
A motivated seller is one with a very good and pressing reason to sell below
market.
The most common problem new investors face is finding bargain properties.
Many who start out in real estate investing quit without ever buying their first
property. They go through the motions of looking for deals for a few weeks or
months and then decide it doesn't work. They forget that finding motivated
sellers is similar to the salesman finding his first customer...it takes
persistence and hard work.
Find the Motivated Seller
At the cost of sounding redundant, the concept is simple: find motivated
sellers that are willing to sell their properties at a discounted price or
"soft" terms. Currently, the real estate market in some parts of the country is
hot, hot, hot! Many people are complaining that the strength of the market
precludes investors from finding deals on properties. The popular misconception
is that in a rising market, even the most motivated seller can find a buyer for
his property at full market price.
The truth is, you can find deals in ANY market. Real estate legend A.D.
Kessler once said, "There are no problem properties, just problem ownerships."
The definition of a motivated seller fits squarely within Kessler's idea. A
logical person knows that time, money and effort can solve virtually any real
estate problem. However, some people are too emotional about their real estate
problems or have other motivating issues to deal with.
Some of these issues include:
- Divorce
- Lack of concern
- Inexperience with real estate repairs
- Time constraints
- Death of a loved one
- Job transfer
- Landlording headaches
- Impending foreclosure & other financial problems
Farming Neighborhoods
Successful real estate agents utilize a technique called "farming" to
increase their business activity. They pick a neighborhood or two and focus
their marketing efforts within that area. You should try the same technique.
Start with a neighborhood that is relatively convenient for you.
1. Drive the Area
Spend a few weekends driving around the area. The goal for you at first is to
learn about the area, the style of houses and the average prices. Over time, you
may expand your farm area, but stick with areas that contain the type of homes
you plan to purchase. It is not necessary to begin your investment career by
learning every square mile of a large metropolitan area; it is important to
learn the value of "typical" homes in your target areas. This knowledge will
enable you to make quick decisions about whether a particular prospect is a
bargain.
2. Attend Open Houses
Visit open houses and "for sale by owner" (FSBO) properties on weekends.
Speak directly with owners and their agents. Pass out your business cards. Make
friends. Word of mouth and referrals are a big part of any business.
Part of the process of finding a deal is to know how to recognize one.Take a
good look at the property and its physical features. After viewing a couple of
dozen open houses in the neighborhood, you will get to know the value of the
properties and the different styles of houses. When someone calls you about a
house in that area, you will know the value by its description.
3. Look for Ugly & Vacant Propertiees
While you are driving around neighborhoods, look for vacant, ugly houses.How
can you tell if a house is vacant? Look in the window! Of course, this practice
may get you shot, bitten by a dog or arrested. First look for the obvious signs
of vacancy -- overgrown grass, no window shades, boarded windows, newspapers,
garbage, mail piled up, etc. If you are not certain whether the property is
vacant, knock on the door. If the owner answers, be polite, respectful and ask
if he is interested in selling. In many cases, it may be a rental property, so
ask the occupants for the name and telephone number of the owner.
If the property is vacant, ask the neighbors if they know the owner. Most
neighbors are helpful, as they know "ugly" houses hurt their own property
values. In addition, ask the mailman -- they know all of the empty houses on the
block. Leave a business card and write down the address of the ugly or vacant
properties. When you get home, look up the name and address of the owner.
Finding the owner of a vacant house can be difficult, which is why the
persistent people who find the information make the most money. The name of the
owner can be found by calling your local tax assessor's office or by looking up
the deed recorded with the County land records.
If you want to contact the owner, it takes a little more digging. Try
speaking with the neighbors or asking the post office for a copy of a
change--of--address form on file for the property. Online services, such as
www.infousa.com, will search public databases, such as the Driver's License
Bureau and the Department of Motor Vehicles.
Some cities, towns and counties will "tag" a house with code violations. This
is often a sign of a neglected or vacant property. Ask your city if you can
obtain a list of such properties or find where this information is publicly
recorded.
For more information, please visit LegalWiz.com
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