As longtime readers know, I’ve been buying fix-up single-family houses and writing about earning profits from these homes for many years. In this three-part series I will share my tips on how to find the perfect flipper properties. (See Part 1: Fast fix to make a real estate buck and Part 2: Surprising places to find real estate flipper properties.)
OPPORTUNITY 3 – ASK LOTS OF QUESTIONS TO DISCOVER MOTIVATED SELLERS AND WHY THEY WANT TO SELL. A question I always ask when considering a possible property purchase is “Why is the seller selling?” Only once was I ever told (by a nasty real estate listing agent), “It’s none of your business.” I later learned the retired old couple was selling their house to move to sunny Palm Springs, Calif., and I could have easily obtained low-cost seller mortgage financing if I had been more persistent!
Purchase Bob Bruss reports online.
There are many reasons why homeowners and investors decide to sell. Some just want to take advantage of a strong local real estate market. Those sellers are obviously not good sources of below-market-purchase-price “flipper” properties. But strong seller motivations are job transfers (relocation companies often discount prices if they have held title to a corporate transfer house for several months), unemployment, divorce, financial problems, illness, death in the family, health, etc.
The longer the seller has owned the property, the better for bargain hunters of “quick-flip” properties. In addition to asking why the seller is selling, here are three more key questions to weave into your friendly conversation with the realty agent or the seller:
- How long has the seller owned this property?
- How much did the seller pay for this property?
- What is the current mortgage balance(s)?
This is usually public document information that your favorite title company where you do business will gladly obtain for you at no charge. But rather than checking the county records, it’s often much easier to get the answers to your questions from the seller or the realty agent. Most people tell the truth! If the seller has owned the property many years, because that seller has a large potential profit, he or she probably won’t demand top dollar. The result is “free equity” for the buyer!
After you learn how much the seller paid for their property, plus the approximate cost of any capital improvements added, then you know how much negotiation leeway you have with that seller.
If you discover the seller purchased the property within the last few years and has a large mortgage balance, there might not be much room to negotiate a favorable price and terms.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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