People hear stories of foreclosed homes selling for $70,000 and they want a piece of the action.  Yes, you can make heaps of equity in this area of the market as well as others but you need to understand how foreclosures are slightly different animals.  Assuming you get financing for the property the transaction is ran and paid for buy the buyer. 

You can expect 45-60 days when things go smoothly and an extra $1,500 in “risk” money.  Once the buyer has an accepted offer they get an inspection ($490) as usual.  If they can live with the inspection knowing the house is being sold “as-is” then it’s on to the next step.  Instead of the seller ordering the well, septic testing, appraisal, and as-built at once the buyer does it  in steps.  You do one at a time so that if a test fails at least you are not out for the money on the other tests.  So you order a well, septic, water test next which takes about 10 days ($500).  Once that looks good you can order the as-built ($450) and finally the appraisal ($650).  If the appraiser requires repairs you sometimes need to get creative to remove those contingencies.

 The truth is you are not financing a great house for $70k.  It takes money to make money.  The best deals are cash deals without a lender.  Think about it.  There is a large pool of buyers that would love to finance a nice home for cheap.  Multiple offers ultimately raise the price if it’s too good to be true BUT if you have cash the pool of buyers is much smaller.  So you buy with cash, repair it, and then sell to that larger pool of buyers who are using financing.  By doing so you raise the demand and the price at the same time.

 There are lots of great financable deals in the form of short sales and sellers with high motivation plus equity, and even foreclosure just not under about $120k. So it is best not to limit yourself to just searching foreclosures.

 In all cases you need a Realtor who is immersed in the local market day in and day out.  They can help you avoid an area with low producing wells, poor water (I know a guy who can light his tap eater on fire!), even road expansions and homes with drug busts.  A great Realtor is hard to find so make sure you choose wisely.

 Remember, “Don’t buy a house without walz”.

I often hear people saying they will wait until the market improves before selling.  For some that is not a bad idea but for many you are missing out on a great opportunity.

Let’s look at an example of a way to win big by selling now:  You bought at the peak of the market for $200,000 and now your house is worth 8% less than when you bought it.  You sell your home for $186,000 taking a $14,000 loss.  Ouch.  Now you get to buy in the same market but instead you buy at higher price range like $320,000.  Well that higher end market has even less buyers for as many homes as are on the market and unfortunately for them they have seen an average of 12% depreciation.  Now when you buy that home you have a savings of $38,000.  After making your move in this market you can then “wait it out”.  Real estate has always come back over time and there is always money to be made in real estate. 

If you happen to already own a home in the $330k range do not be disheartened.  This same scenario works the same for you except you will see even bigger savings.  I personally helped a buyer this past year get a home for $650,000 that just a few short years ago sold for over a million.  He will stay comfortably in his high end home while “waiting it out” to cash in on his $350k+ savings.

This is just one example of how to come out ahead in this market.  There are many more ways if this one does not fit you well enough.  Call me today to discuss all the options and as always, “Don’t Buy A House Without Walz!”