If you're a real estate investor, you know it can take quite some time and effort to locate a potential property, make an offer, and strike a deal. There are lots of properties for sale, but finding a "deal" is not always easy. Fortunately, more tools and websites are continually making it easier. As a result, you can now do most of your analysis on a property before you even see it.
There are subscription sites like Real Quest (www.realquest.com) which let you look at liens, tax records and comparable sales. In addition, many of the counties across the U.S. have free access to tax records via the Internet. And, of course, if you're a Realtor you have the MLS. All of this information via the Internet helps you calculate what a retail condition property is worth within a few thousand dollars.
Once you've done your analysis, it's simply a matter of viewing the property, figuring out what repairs are needed and then making an offer. One of the most common ways to figure out what to offer is to take 70% of ARV (after repaired value) minus repair costs. That's the numbers side of the business, but deals are won and lost on the personal side.
When you meet or talk to a seller you must listen to them. Why are they selling? What is their financial situation? Where are they moving to? Don't probe with questions, build up a rapport and then listen. If you can give them what they need, you both win and you can strike a deal. The problem is, not all sellers are motivated enough to give you a deal that works you. That's why it's important to do your analysis up front, screen the seller over the phone and save your time and theirs.
What if you are busy rehabbing properties? You don't have time to screen sellers and do all the analysis. That's where the value of a wholesaler comes in. They spend their time finding the deals, negotiating a discount and then offering them to you. Sometimes they even provide 100% financing. And, if they're buying them right, you get a good deal, they earn a small profit and it works for everyone.
Unfortunately, the problem with this process is when wholesalers have to hold properties longer than they like. When that happens, the holding costs are passed on to buyers and prices increase.
The good news is that the Internet is increasing the speed of the transactions. Wholesalers can now use on-line auctions and other creative internet strategies to find buyers and close deals faster. Buyers can negotiate efficiently and openly so they get the best price. The key is a better medium to share information and negotiate with multiple buyers at the same time.
Written by Tom Wood - Real Estate Auction Place (www.reiauctions.com) based in St. Louis, MO. help@reauctionplace.com or (636) 527-3439.
