What is a “distressed” property? What is “bargain” real estate?
A distressed property is one with a distressed seller. Job loss or transfer, divorce, death, pending foreclosure, and lack of money cause sellers to sell quickly for less. Discovering the seller’s problem and finding a solution is the key to buying a bargain property. A distressed property can also be a “doghouse,” a dump, or a fixer-upper. Owners of “doghouses” are not always salesmen in distress.
18 Easy Steps to Buying a House at a Bargain Price
1. Get good advice from successful investors. Ask your friends and real estate agents for investor recommendations.
2. Create your personal “Investing Journal” such as the Doghouse to Dollars Workbook: Turn Yucks into Bucks Investor’s Guide.
3. Define investment goals: Do you want to buy a house to live in, fix it up and sell it, or save it for your future?
4. Get credit reports and scores. Create a file for each credit reporting agency. Take care of any credit problems.
5. Read books and articles on real estate investing. Attend workshops and seminars. Avoid outdated infomercials on TV.
6. Get good advice from lenders. Choose a lender with great service, a good closing history, and fair fees. Arrange financing.
7. Define your target locations: Is the property you want close to home or work, a vacation or second home?
8. Know your target market. Study the real estate newspaper sections. Collect houses for sale flyers. Look at the sales and write down the prices, amenities, and terms. Follow HUD sales in your area.
9. Interview real estate agents and learn from them. Do not sign any agreements with agents that limit your search for properties on sale. (These contracts make you pay the agent a commission even if you buy by owner.)
10. Use agents who know the customs of the local market and ensure that you get many offers.
11. Find a good escrow officer to buy “for sale by owners.”
12. Study home remodeling, design magazines, and books. Know the costs of materials, supplies and trades. Visit home improvement stores. Take into account the costs of building materials.
13. Be prepared to know a listing when you see it.
14. Make lots of offers. Bid on the rest of HUD.
15. Buy only bargain properties. Get great terms or concessions from the seller.
16. Plan the transformation of the house during the escrow. This speeds up your work time, saving you money on maintenance costs.
17. Supervise the closing of the real estate escrow. Don’t jeopardize your finances by charging credit cards or making unnecessary purchases.
18. Celebrate your “doghouse” purchase with an open house!
(c) Copyright 2014, Jeanette J. Fisher. All rights reserved.
