How to Find Good Real Estate Deals
Buying a house is one of the most important decisions of a person’s life. Whether you buy one house in your entire lifetime or change multiple houses, it always requires careful planning and decision making. This article is for those that are either relatively new to investing in Real Estate and need to know how to find good real estate deals, or are looking for a new home to live in and possibly rent out later as an investment as you move on in your REI career.
With the real estate market booming these days (tax cuts, less regulations, proper leadership at the top, some of the main reasons real estate in America is rising), there are good deals to find if you know where to look. There are plenty of people making a killing on the property market, and plenty of people getting incredible deals because they knew what to look for. How to find good real estate deals is a science and also an art!
Of course, we all need a place to live, but aside from that, property is an excellent investment option (you do not have to be Donald Trump to know that!). Even when you don’t need another place to live in, buying property could be a profitable way to make money off your investment.
If you are a first-time property investor, you could be overwhelmed with all the different investment options available to you. You could choose to buy a foreclosed property, or a HUD property, or a property directly on sale by the owner, also known as For Sale By Owner (FSBO) properties.
A property can be bought in several ways, including the above. It is possible to get a good deal, no matter which way you purchase a property. Ideally, a concrete deal means getting the best at the most competitive price, but there are a lot of factors that affect a property on the market. Let’s first take a look at the different types of property on sale.
In simple words, a foreclosure is what happens when a homeowner fails to pay off the mortgage, and the property is used as collateral by the bank to make up for the dues. When you buy such a property, you are buying a foreclosed property.
At the present time, more than half the country is neck deep into foreclosures and some people are making a nice living out of it. The number of foreclosed homes in the US is beyond imagination. Loans are hard to pay off for some people, but it is not a crisis as it once was with more jobs available and with a better economy, people are able to make those steady housing payments month after month. But there is still some ripe deals for many home buyers.
However, there are many downsides to buying foreclosed homes. First of all, good deals on foreclosure often go away faster than you can imagine. If you want a nice property in a premium locality at 50 percent less than other localities, you are harboring unrealistic expectations. But it is definitely possible to get a decent property at 20 percent less than the market value if you’re willing to choose your neighborhood wisely.
Buying a foreclosed property could be an excellent investment opportunity for the first-time investor, and prove to be especially profitable since the market, as already mentioned, is rising. Now the stock market is on fire but that is a different matter. Nevertheless, real estate prices are rising and even faster in some parts of the country compared to others. Moreover, if you know what pitfalls to avoid, finding a good deal on a foreclosed property is possible.
This is also a type of foreclosure, but one that is run by the government. This is a housing program by the US Department of Housing and Urban Development, where homes have been taken over by the government because of a foreclosure. To make up for the loss of money, the HUD sells these houses to the general public.
At first glance, it seems like a normal foreclosure. However, along with the rules of foreclosure, there are rules of the HUD that need to be followed in order to be eligible to buy the property. Although there is a lot of negative impressions about foreclosures ever since some people lost their homes during the recession, buying a HUD home can not only be a pleasurable experience but also turn out to be a stellar deal.
Since this is a government program, there are some basic rules and regulations that need to be followed. The website of the HUD clearly lays down the answers to frequently asked questions about the purchase, inspection, and financing of HUD properties. Though rules sometimes vary from one state to another. Before deciding to purchase a HUD home, it is paramount to be familiar with what the program is all about.
Any first-time property investor harbors the misconception that buying a home isn’t possible with a broker or an agent. It couldn’t be farther from the truth. Buying and selling a property is definitely possible without an agent. There are for sale by owner or FSBO opportunities. Hiring an agent or a broker can be expensive but not always and they can save you lots of time since they know the market probably better than you do since this is what they do for a living.
But you can do some serious work without getting anyone else involved that is for sure and if you do not want to hire an agent you do not have to. This is the FSBO process.
Likewise, it isn’t necessary to hire an agent if you’re trying to sell a house. You simply list your property on the market, choose the buyer, negotiate, and close the deal. Though it is smart to have a real estate agent because there are certain laws that must be followed and you do not want to violate a law since you could be later sued by the buyer and you do not want that. But it is your prerogative.
There are hundreds of FSBO properties on the market, and they sometimes cost less than other homes because it doesn’t involve an agent. It can be tricky sometimes to go ahead without an agent, because the agent is there to advise you and help you make the right decisions when purchasing a property, but if you know what you want and are aware of the steps you need to follow, buying a FSBO property could be very profitable.
How to Find Good Real Estate Deals
As mentioned earlier in this post, a good deal means acquiring the best home, at the most reasonable pricing.
Whether you buy a foreclosed property or a FSBO home without an agent, it is possible to find a terrific deal in many locations. Follow these steps to find a better deal in a shorter time.
Do not ignore overpriced properties
Reasonably priced properties are gone quicker because they are already a suitable deal. It’s the more expensive, overpriced properties that sit on the market for years, particularly if it’s a foreclosed property. When a bank is trying to recover its money, the property may be overpriced.
But never underestimate the power of negotiation. If the bank has been sitting with the property for a few years or even close to a year, they could be more eager to sell it. That’s when prudent negotiation skills can get you a nice property for an appropriate price.
You may or may not need an Attorney
There are a lot of legal formalities before, during, and after the purchase of a property that need the guidance of a qualified real estate attorney. The attorney will not only guide you with all legal formalities associated with the purchase of property, but could actually help you recognize a good deal.
You probably do not need a legal professional if you have a real estate agent. This is what real estate agents are for.
Whether you buy a foreclosed home, a brand new property from the developer, or a home from the owner, the seller will always want proof that you are a serious buyer and capable of paying the money. Therefore, you must get pre-approved for a mortgage before you approach the seller with an offer. Getting pre-approved is a good way to find out how much you can afford to spend on a house, and you can then look for properties within your budget.
Look at the Neighborhood
The locality often says a lot about the value of homes. If a property is located in a decent neighborhood with good schools, supermarkets, and easily accessible transportation, then the value of homes will keep rising. But if there are lots of foreclosures in the same locality or no good schools or transportation options, then be wary, because prices could keep dipping.
You do not want to buy a home near a low income housing project either, for example. Well, unless there is a fantastic deal and this is what you can afford.
Check Out the Property
Do not believe what you see in the pictures. More often than not, the pictures in the online listing may not be the entire story. Before you know how to find good real estate deals
Checking out the property is the best way to see what you’re negotiating for. An online listing may come with a few pictures of the rooms, but when you see the house for yourself, you may find that the property has a well-kept garden or an upgraded landscaping. Similarly, you could like what you see in the pictures, only to find that the house isn’t actually that pretty for real. Never settle until you see it for yourself. They may not show you the spruced up bathroom or bedroom that has wall damage and electrical problems and so on.
Buy at the End of the Quarter or Year
When buying a foreclosed property, making a deal at the end of the month, quarter, or year is usually profitable, that is the time when banks want to settle old accounts and close deals. For instance, making an offer in February with the promise that you can close by 31st March is good news for the bank and could result in a good deal.
There are a lot of marvelous deals waiting for the first-time property investor. The property market is full of ups and downs, so it’s necessary to know the current state of the market before investing in a property to know how to find good real estate deals. Whether you buy a foreclosed home, a new home, or a property put on sale by the owner, following these tips, negotiating well, and working with a qualified agent could mean you end up with a fantastic property for the right price.