Archive for August, 2010
The real estate tips that follow are meant to help you avoid common and not-so-common mistakes. Buying a house or other property always involves some risk, but there are many ways to reduce those risks.
1. “As Is” Property Inspections
Some sellers (including banks) specify that a property is sold “as is.” Of course all properties are ultimately sold with no promises other than those made in writing. We take our chances. But if sellers won’t allow an inspector into a property, walk away. There is no good reason that a seller shouldn’t allow an inspection, and the bad reasons are a risk you don’t need. Banks generally won’t loan on properties under such conditions anyhow, so you may be in trouble with financing in any case.
2. Plan For The Unexpected
Plan on at least $2,000 for “unexpected costs” when buying any real estate. One investor I know, who was very careful in his planning and had done many rehab projects, still found that he averaged a couple thousand more that he estimated for total expenses. Even when you are buying a home for yourself you should expect the unexpected, and make it part of your budget.
3. Check The Attic
On older homes, be sure to pop your head up into the attic (or have the inspector do so). Have a flashlight with you. You want to look for signs of leaks, as well as looking to see if the wiring has been updated. There are still bare wires strung on ceramic insulators in some old homes. Note how thick the insulation is as well, and whether there are any signs of animals.
4. Lay Of The Land
Look at the way the land lays around a property. On a sunny day after a dry-spell, you might think nothing of the slope towards the house or buildings. But it almost certainly means there will be water pooling near the foundation every time it rains. See if there is proper drainage, and then look for any water stains on basement walls.
5. Negotiating Through Real Estate Agents
You might think you have to meet the seller in person to use most negotiating ploys, but there are some you can use even when a real estate agent will be presenting the offer. For example, you can hesitate when you make an offer, and suggest that you really didn’t want to go this high. You might even start talking about another investment or home opportunity that you’re looking at. The agent will certainly pass along this information, and may suggest that the seller accept the offer as written rather than risk chasing you away with a counter-offer.
6. Know Your Costs
This may be the most important of these real estate tips. You should plan for extra expenses as mentioned above, but you also need to know what your ongoing costs will be to honestly compare properties. This is true whether you are buying a home for yourself or investing. Property tax and insurance rates can be very different from one property to another, for example, especially if they are in different towns. One house can cost twice as much to heat. Mortgage rates and cash advance can be substantially higher on a home if it is classified as a mobile home (and some double-wide mobiles look like standard stick built houses). Calculate what youll be paying at closing, of course, but also know what your ongoing expenses will be.
I have been a real estate entrepreneur for years, so I know the industry pretty well. In my opinion, buying homes for sale by owner is the best way to go about business investment. When you buy real estate homes for sale put on the market by a big property management company, you are dealing with a slick professional. He or she will do everything in his power to make you buy the house. They know all the tricks, and can make a home that would normally look decrepit appear to be in the prime of its life.
When you are buying homes for sale by owners, however, you never have to deal with this problem. Of course, every home for sale by owner is different, but then again every owner is different. You can consider them, figure out which ones you trust and which ones you don’t, and find a house that really is a great deal. With homes for sale by owner, you can even sometimes do better than the market price. Some owners just simply don’t know what they have. There is no other way to say it. They will put a house on the market for well less than it is worth, and it is up to you to snap it up.
Other times, homes for sale by owner will be priced low because the owner has personal problems and needs the cash than. Even if the market might be depressed, and it might be a poor time to sell a home, nonetheless these owners will put them on the market or maybe with thequick loans looking for the money that they need. If you are willing to take the time to spot these homes for sale by owner, you can get a pretty great deal. Then, all you have to do is fix it up and wait for the market to shift again. If you have the capital, you have the power. It is as simple as that.
Of course, real estate for sale by owner varies in different places, many owners will advertise them online for example www.frbo.ca or www.holidayhomes.ca. Although owners and not supposed to discriminate, they really do. Buying homes for sale by owner means that you have to be able to please a wide variety of people. The owners, after all, are more likely to sell if they like you. If they don’t, you will have a heck of a time closing the deal. Buying and selling is based as much on charm as it is an economic factors.