I learned practical lessons today...check this out

Today I looked at a house that I should not have looked at. That means that I wasted my time. THat means that I learned valuable lessons about how to pre-screen leads. Yes, I learned how to pre-screen leads, but I didn’t understand the motivation it takes directly from the get-go. As a result, I wasted my time, my wife’s time, and my father’s time. Let me explain.

The ad read: “$77,000 Attention bargain shoppers! Sale flipped! Best buy on the market! Priced $35k below appraisal! Needs a little TLC inside & a whole lot of TLC in the backyard! 1560 sqft. 3 bd, 2 ba, Garage w/shop.” (eastern Washington State)

When I talked to the realtor, she down-played the amount of work necessary to sell this house at “appraised” value.

As a result, this is what I have learned looking at my first home as an “investor (haha)” :

  1. Ask about the neighbors - especially when the agent has been to the home. This particular home was in a neigborhood of mobile homes. There was also a storage facility nearby and a trucking business also a railroad which was loud

  2. Tell the agent I’m an investor and I am looking for a home that needs merely cosmetic improvements. If this home needs anything more, I am wasting your (real estate agent’s) time.

  3. Did I mention storage units? Have you ever seen storage units next to nice homes? I even knew they were there before I drove to the home.

  4. Research crime rates with local police if any question as to the degraded “value(s)” of the homes in the area.

  5. Real estate agents will lie about the condition of the home.

  6. When the property is 0.16 acres that means it’s TOO small (in our area).

  7. Missing appliances is bad. Missing trim in entire house is bad (a little thing repo’d people like to do to “rip” off the banks).

  8. If it says “needs a little TLC” that means ignore ad.

  9. Appraisers CAN be wrong. The home was apprasied at $110K. I would have only paid $50K.

  10. Can probably trust the assessor for value of neighborhood (in this case it was $78,000 for just about anything - new or old in the area.)

I learned many valuable lessons today. If I am wrong on any of these PLEASE let me know. I would hate to have a false analysis. THank-you.

Pre-screening is the most important part of finding good deals. BUT you can’t get all the info and all CORRECT info over the phone, you will always have to drive the area and drive the comps.
But on the prequal get to the bottom line ask quick as possible.
Q’s for realtors:

  1. I am interested in the house on suchandsuch street, I can pay cash and close quick, but I need a little info. Is that okay?
    Realtor is gonna say yes, its their damn job.
  2. alright, give me the run down of the condition of the house, I like them really beat up so the worse the better?
  3. okay, what is the worst case senario of repair costs to bring this house to excellent condition?
  4. do you know what this house would sell for in excellent condition?
    —make sure you get these numbers out of their mouth, say “well I’m not gonna hold you to the figures i just need a feel” or “just go by the seat of the pants, it no big deal” or something like that just get the numbers
  5. Ask the realtor to hold on for one second then use the formula- their estimate ARV times 65% minus their estimate repair cost=offer price
  6. once you get the number say “alright if your figures are correct, I can pay cash and close quick at suchandsuch price, would that be something your seller can work with?”
    Remind this this is just a ball park figure, and that you have to verify the numbers.

If they say yes get out there, estimate repairs and after-repair value, use the formula and submit the offer.
If they say no the seller has already turned down suchandsuch offer, ask if you can call back once a month to double check and resubmit your offer, then put a yellow sticky note with offer price and offer date, file it for that months rejected follow-up offers and hit it next month.

p.S.- areas sell at a discount or premium to the taxed assessed value, learn which areas sell at a discount/premium and you can get a quick feel for the appraised value. This is not a hardandfast rule, just a quickie pointer.

Damn that was a long message for me to type, but I hope it helps :wink:

These seem like good pointers.