You make your money when you buy real estate, not when you sell it. We all know that motivated sellers exist in every real estate market. Even in a seller's market. You may not have as large of selection of motivated sellers as you did 18 months ago. However, by remaining diligent, you should have a few in your pipeline at all times.
The question in front of us is using the best methods to find the best deals.
There are the basics like watching the MLS and FSBO owner ads for statements like 'must sell', 'fix up', 'needs work' or 'motivated seller'. Also watching for vacant houses, both for sale and rentals. But what else should you be doing?
You need to start researching the type of property you want to buy 6 to 12 months before you buy. And at the same time be prepared to move on a moments notice when you find a bargain property 50% below market value.
Research the MLS for stale properties. Those that have been on the market for over 90 days. Whittle down the list to stale listings where the price has been repeatedly lowered. Now you have a short list to begin researching individual properties. Or if the list is still too long, narrow it further to those that are vacant and the owner is probably still making payments. They are probably ready to sell for what ever remains on their mortgage.
Another common technique is having agents on the outlook for bargain houses coming on the market. That's great but don't wait for them to send you a weekly email of new listings. Bargains go fast. You want to work with agents willing to contact you the moment a bargain comes on the market and you need to be prepared to lock it up within hours, not days.
Different investors are focused on specific markets. Are you too narrowly focused? Are the real bargains in a different market? Remember, every property has a value. Even a property infested with termites is still worth the value of the land.
Once you find what is close to a bargain property, do everything you can to learn what is motivating the seller. You use that information to further motivate them to accept your ultra low offer.
Do they need to rent the property back from you for a few months until the crisis in their life passes? Putting that in the offer can make the difference between accepting your offer or a higher offer.
Does the seller need immediate cash? Offer to loan them money immediately with a note secured by the property. Have it apply towards the down payment.
Does the seller need a quick escrow? You should have a process in place to close in less than 10 days. An all cash deal can close in as little as 3 days.
There are bargains out there. When you constantly feed potential properties into your pipeline and you are prepared to move instantly, you'll be the one snapping up the best deals.
Author bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon his 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.
Great tip! The point about every property having value is an important thing to keep in mind in my opinion. It can be easy to overlook that point and thus miss out on a great purchase opportunity.
Thanks for your insight. It can be an important tip. Even if the property doesn't meet your current investment objectives, it can be passed on to another investor to create goodwill that will be repaid at a future date.