Do you want to buy a house at 30%, 40% or more below “fair market value”? It certainly is possible. Investors are using these strategies every day, all over the country. The same techniques that work for investors will work for you, saving you a ton of money and resulting in “more home” than you thought possible.
The strategies will work for anyone, as long as you have patience and some flexibility in time and location.
Note: All of these strategies will work on properties listed on the MLS. They work even better for properties that aren’t listed. If you find a property that is not listed, that is another advantage for you: you will have little to no competition for the property, since it is not advertised for sale.
Tip #1: Vacant Homes: Look for empty houses. Because no one lives there, by definition, that’s a house that someone else (the owner) doesn’t need. He or she is elsewhere, probably paying a mortgage or rent on another property. Still, the empty house costs the owner money every month. There may be a mortgage, a line of credit, utilities, maintenance, taxes, and more.
Insider tip: Some localities charge much more taxes for vacant houses. Example: The Washington DC residential tax rate is $0.85 per $100 of assessed value. That’s pretty good. But if the house is empty, the tax rate rises to $5.00. If it is a vacant “bunker” property, the tax rate is an incredible $10.00. Owners of vacant properties in DC and many other places are highly motivated just by that huge tax rate. If it’s listed in MLS and has been on the market for maybe 30 days, make a low offer. If it is No listed, please contact the owner and begin negotiations.
Tip #2: Bad Rental Properties: Actual investors oversee the court, specifically landlord-tenant cases (generally held one day a week). Whether the landlord wins or loses, he may just want to get rid of the property. You can also find the owners of these properties by advertising online through sites like Craigslist. Bonus tip: Contact property management companies. They will know about their properties with bad tenants, and they can know if the owner is interested in selling.
Tip #3: Legacy Homes: These can be very similar to empty houses. Sometimes they are vacant; sometimes not. (If not, it’s usually a relatively temporary life there.) Often the heirs do not have a use for the house and are not interested in becoming owners. Meanwhile, there are those recurring monthly costs, like with empty houses. Inherited homes are often not in good condition or up to date, and heirs aren’t interested in spending thousands of dollars just to spruce up the place. They want to sell quickly and get as much money out of the house as they can.
Investors check records at the courthouse and contact probate attorneys. You can do the same. Also, tax records (which you can research or have a real estate agent or investigator research) will usually show which houses are in trusts or have been inherited.
Tip #4: Absentee Owners: These are homeowners from out of town who have rented out their house. This is different from “bad rental properties.” In many cases, the tenants are okay. But out-of-town owners are ready to “move on” or cash in on the property. They have much less emotional attachment.
Advice– Search for properties that have been owned by the current owner for more than 20 years. These owners are more likely to be interested in selling and have little emotional attachment to the property. They also likely have more equity in the house, which will allow them to accept your lower-priced offer. A real estate agent can quickly research tax records and find property owners who meet these criteria.
An investor-friendly real estate agent can help with any of these. (Some investors use brokers; others don’t. So this isn’t a plugin for brokers, but there are things they can do, like get cleared [determining the property’s value by looking at recent comparable sales]–which the average person can’t.)
As with any offer, the lower it is, the less likely the owner is to say “yes.” On the other hand, owners of the types of properties listed above are much more likely to accept low offers than the typical seller. These are the classic “motivated sellers.” They want sell. In some cases, they need sell. You are offering a solution.
Tip #5: Property Condition: Many of these properties will not be in excellent condition. Some will be fully deliverable. Others will be very outdated (inherited houses often are) or damaged in some way (bad tenants). You must complete a home inspection and may even condition the purchase on a satisfactory home inspection. But be willing to buy the property as is. What you’re saying is that if you buy it, you’re not going to ask the owner to do any repairs. (What it will do is discount your offer to cover necessary repairs and maintenance.) In most of these cases, the sellers are not eager to do all kinds of repairs and may not even have the money to do it. Make it easy on the seller: buy as is.
Those are 5 strategies investors use to find and buy real bargain properties. You can do the same.
