Buying Houses: Types of Bargains to Find

To make a good profit in real estate, you must buy right. Check out all property types available to find the best transaction for your specific situation. Consider fixers, distressed sales, repossessions, multiple listings, for sale by owners, and vacant properties just wasting away.

Distressed Properties

Recognize the difference between a fixer and a distressed property. Distressed properties may be fixers or just unwanted houses. Divorce, job loss or transfer, death, financial difficulty, and other problems often force a sale for less than market value. Just because an owner's problem causes a distressed sale does not mean the house requires fixing.

REPOSSESSIONS

Although the repossession market seemed dried up last summer, houses are beginning to appear on foreclosed lists again. Lender Rob Kramarz with Nationwide Mortgage (www.seetloan.com) says that this may be the beginning of another real estate investor boom.

Look for great bargain properties for sale by HUD, VA, Freddie Mac, Fannie Mae, and Bank-REOs (acronym for real estate owned). Real estate agents try to discourage you from repos and switch you to multiple listed homes. Do not listen to negative remarks about how hard it is to find a good deal property. Find another agent. Even in the hot market at the time of this writing, when the average house sells in less than three weeks, we found two properties for at least forty thousand dollars under market value.

Paying a listing service to mail you lists of repossessed properties is a waste of money. Actually, by the time you get these lists, the houses are already sold. Many web sites listing foreclosures thrive on the web for no charge to you.

Take a flashlight with you to view a repossessed property. With no electrical service and boards covering windows, viewing dark rooms is tough. A good real estate agent will have her own flashlight, but you want to see what you want and not what she wants you to see.

HUD

In our area, new HUD listings post online late Thursday night or Friday morning. New "Daily's," homes previously sold which fell out of escrow, post Saturday morning. Properties not sold during the bid time stay listed as daily's. Bids, due by the following Tuesday at midnight, must be submitted by a real estate agent who has completed HUD registration. Don't waste your time using a Realtor who is not familiar with selling HUD homes. Any mistake causes the bid to be rejected. Don't use an agent who says you must bid way over minimum bid. Find an agent specializing in HUD homes who wants to work with you on your terms. Many bargain HUD homes do sell for far more than the minimum bid. Hold out for the one property which doesn't get way overbid. (I bid about $40,000 under minimum on our second home owner-occupant mountain cabin.)

We submit many bids and win enough to make it pay us well. HUD only allows one repo purchase as an owner-occupant every two years from the date of closing.

Rely on your gut instinct and don't let your real estate agent unduly influence you. It is not a difficult process for your agent to make a computer bid. You need an agent willing to make a few bids to get a successful bid. This is like winning a lottery, with the odds in your favor.

Bids must have a lender's loan commitment statement. Lenders unfamiliar with HUD requirements also waste your time. Any mistake causes you to lose the purchase. Not all lenders understand HUD's bid, finance, and purchase process.

When placing a HUD bid, raise your offering bid to cover some of your closing costs. This means you get HUD to pay your closing costs and save out-of-pocket expenses. Also, the higher sales price impacts the market comparable sales in your favor for sale later. Your purchase price influences the values of the market area. Keeping prices higher for active sales during your renovation time protects your investment potential.

Don't get attached to one particular property. We placed a bid on a home I loved in Apple Valley and lost it by a few hundred dollars. The house came back on the list later, not at all uncommon for HUD repos. But, by this time, we had already purchased a better distressed property.

VA

Cleaner than HUD repos, homes owned by the Veterans Administration are also offered on a bidding system through real estate agents. The VA partially fixes up their repossessed homes. The VA sometimes offers vendee (seller) financing with few processing costs, low interest, and no prepayment penalty. You do not have to be a Veteran to buy these easy to qualify for homes.

As of this writing, the VA is changing the way these homes are offered for sale. This is another reason you need a real estate agent who stays on top of recently revised marketing procedures relating to government-owned properties.

Less known government agencies such as Fannie Mae, Freddie Mac, FDIC, SBA, the IRS, and GSA list repossessed properties on their individual web sites. These properties, rarer than HUD and VA, usually get cleaned and repaired before listing with real estate agencies with sale prices closer to market value.

REOs

Banks often offer their real estate owned-REO homes at bargain prices. Depending on the bank's resale policy, conditions of the property, and available financing, REO opportunities vary widely. Several banks lend on their repos while other banks just want out. Great financing becomes possible through the banks who offer in-house terms. Ask for no points, minimal loan costs, and no prepayment penalties. Check with your local lending institutions and find out how they market their repossessions. Many of these bankers will give you their web page listing available property. Befriend real estate agents who specialize in listing bank-owned repossessions so they will notify you of a new listing immediately.

Multiple Listings

It is hard to find a bargain in multiple listings, but not impossible. Check out listings which have been on the market for awhile. Look for vacant houses, as these cost the seller money every month. Make an offer for much less than asking price with a quick escrow. Many anxious sellers jump on an offer if they think they will be out of their problem in only ten days. This is another reason you need a lender and an escrow officer who perform fast.

I follow the multiple listings in our area on the Multiple Listing Service. One of my agents emails me new listings daily. You need an agent who calls you the minute a new distressed property listing becomes available. Under-priced listings mostly get snapped up by the real estate agents and their investors before they hit the market.

Just like making many bids, make many offers. You never know when a seller's problems reach a critical point causing abrupt action.

For Sale by Owners

Houses for sale by owner may not always be a great buy, but there is always at least one bargain out there. Many investors prefer buying directly from the owner. If you have ever tried to sell your home by yourself, you probably met some of these investors. Cruel, hard, and in some cases, fraudulent investors dream up all kinds of schemes to steal houses from distraught homeowners. Understand that the home seller most likely dealt with these callous investors before you and therefore may view you with suspicion. Earn their trust by working with them honestly and compassionately.

Seller's Motivation

Let honesty and kindness guide your actions with sellers. Finding out the seller's specific problem is the key to helping them and yourself. Uncover the seller's particular need and find a solution. Because it is embarrassing for some sellers to let you in on their troubles, extra sympathy and relaxed timing helps you unearth their underlying motivation. Listen carefully, stop talking, and pay attention to details which lead to understanding the real reason they need to sell.

The seller may need a quick escrow, need to rent back the home for a while, or want immediate cash. You could give the seller a loan of cash with a note secured by the property. Ask an attorney about your state laws regarding this type of purchase advance. We offered a seller a $2,000 deposit outside of escrow, which went toward the down payment, to entice a money-hungry seller to commit to our low price.

Many sellers do not need all of their cash out. Owner financing is a great deal for you. Usually, you get a lower interest rate and you don't have to pay lender's points or prepayment penalties. Also, these loans typically won't show on your credit report so you won't have these payments counted against you. If you have a good credit report, take a copy with you to show to the seller. This prevents more inquiries on your credit history and keeps your credit score from dropping.

Ready to Buy

Be prepared to make an offer immediately when you find a bargain. Make sure you are pre-approved with a great lender who can close quickly.

Distressed sellers and fixer houses offer you a great way to get into the real estate investing business.

(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.

Professor Jeanette Fisher, author of Doghouse to Dollhouse for Dollars, Joy to the Home, and other books teaches Real Estate Investing and Design Psychology. For more articles, tips, reports, newsletters, and sales flyer template, see http://www.doghousetodollhouse fordollars.com/pages/5/index.htm

---

What Can I Realistically Earn In A Lease Purchase Business?

If you're looking at Lease Purchasing as a business, you'll... Read More

How to Build a Real Estate Investing Power Team

As you continue to read about real estate investing, you... Read More

Finding Structural Problems During Escrow ? Upscale Home Example

When buying and selling homes, the property purchase is often... Read More

Selling a House is Easy

The thought of selling a house strikes fear into most... Read More

Title Insurance ? Examples of Problems and Advice

What is title insurance and why should any buyer get... Read More

According To Sellers, Silence Isnt Always Golden?

When trying to sell a home, silence isn't always golden... Read More

Bulgarian Property Market Insight

GOLF GRABS BULGARIA!At the present time there are only three... Read More

Real Estate Investing - The Dream House Effect

Several years ago I developed a philosophy in renovating houses... Read More

Selling Your Home? A Warning About Attachments

Before you list you home for sale, determine what you... Read More

The Cat in the Attic

Strange and unexpected things happen during home inspections. Seldom are... Read More

FSBO: For Sale By Owners Chapter One

She reached the phone on its second ring. "This is... Read More

Transforming Doghouses into Dollhouses

Successful real estate investing depends largely on a correct assessment... Read More

If You Cant Afford to Retire...Move

According to Warren Bland, PhD, an award-winning author and geographer... Read More

Selling Property - Valuing Your Property

Selling property privately has many advantages over using an estate... Read More

Maintaining Small Town Charm In An Ever-Changing World

Virtually any state in the country has the appeal of... Read More

Real Estate Investing ? FSBOs vs. Agent Listings?

Many would-be real estate investing professionals face discouragement because of... Read More

Rapid City Real Estate Agents

Take me Back to the Black HillsLocated in Western South... Read More

How Much Should I Pay For This House?

We probably answer this question for someone a couple times... Read More

How To Find Your Dream Home In Belize

Shopping for property in Belize is not as simple an... Read More

How Real Estate Investors Use Mortgage Note To Purchase Properties

Many of you may not be aware of the various... Read More

Real Estate Investing In Mexico

Mexico is CHEAP! But its getting more expensive. As property... Read More

Investment Property - Leveraging Rental Property Equity

Owning investment property is a tremendous wealth building strategy. Thousands... Read More

Decorating to Sell a House by Meeting Three Key Needs

Specific marketing campaigns are no longer just for automobiles and... Read More

How To Increase Your Homes Selling Price by $3,306.75 In The Next 33 Days

According to the Federal Housing Finance Board:... "As of October... Read More

Dubai or not to Buy? A Short Assessment of the Dubai Property Market

Never has there been such an ambitious and creative drive... Read More

Real Estate Problem Solver

IntroductionThere are many areas one can invest in. Since I... Read More

Buying a Newly-Built Home? Ten Benefits of Using a Real Estate Professional

It might not seem necessary to involve a real estate... Read More

5 Rock-Solid Real Estate Investment Strategies

Investing in real estate is more complex than simply buying... Read More

Jacksonville Real Estate Listings

With over 30,000 residents, Jacksonville in central Arkansas is a... Read More

The Many Benefits Of Lease Purchasing

Lease Purchasing affords wonderful benefits and opportunities to sellers, buyers,... Read More

Do You Need to Download a Landlord Inventory On-Line Today?

Do you need to download a Landlord Inventory on-line now?... Read More

Selling Your Home: The Power of a Great Sales Flyer

Even though its importance is often overlooked, a great sales... Read More

Reprint Rights and How To Use Them To Generate A Steady Income

I can't emphasize enough how important it is to have... Read More