For savvy investors, there could be opportunities in real estate as properties in the current market dip in value. Collectively, prices for all types of property have fallen during the last months, as reported by CoStar. We can expect some owners to look to sell later this year, based on their difficulty to make financial ends meet.
Finding these low-cost places with great potential, however, is not always as simple as a quick web search. In fact, from my experience I’ve learned that the best deals tend to require some careful investigation. It often depends on who you know and where you look.
Properties for sale come in several forms, and we’ll cover each, including their advantages and potential drawbacks. Be aware as you get started that all carry some level of risk, and ultimately securing a deal will depend on other factors like your financial backing and experience.
On Market Listings
If a seller engages a sales broker to carry out the marketing steps, the property will typically appear on multiple listing services. The broker might share the listing with their contacts, put information about it on their website, and do everything possible to spread the word. While this method usually means you’ll be able to access accurate and up-to-date information about the property, it also puts you in a potentially large pool of other bidders and increased competition.
On market listings can include auctions, which are usually overseen by a listing agent. Auctions might be conducted in person, such as on the courtroom steps after a foreclosure. They can also be online through platforms such as Ten-X. Before the auction, you will typically need to get preapproved and may be required to post a deposit that you won’t get back if you win the bidding war.
With auctions, I always advise setting parameters before you get involved. Decide how much you’re willing and able to bid, and then hold to it. It’s not uncommon for sellers to put a high starting price to see how buyers will react.
Off Market Properties
Similar to how a home might have a “For Sale By Owner” sign placed on the front lawn, some owners decide to sell buildings on their own. They might be trying to save money on advertising and broker fees and think they can bring in the most by doing it themselves. There could be less competition, as fewer may be aware of the property. However, if there isn’t a broker involved, you may find it difficult to agree on terms with the seller. You also might not have access to pertinent information which could help you make a solid decision.
Keep in mind that off market doesn’t mean there isn’t a broker involved. Sometimes a broker you know could bring you a deal off market. They may not be the exclusive agent for it, or representing the owner, but they may have found out about the opportunity. If you have cultivated a relationship with a broker, you could increase your chances of having them bring you an off market deal.
Above all, off market doesn’t always guarantee a great buy. Sometimes a marketed property will be beneficial, as the process may help the seller understand the marketplace and have realistic expectations. This can be especially advantageous if the owner originally had inflated figures in mind for a sale price. For an off market deal, I like to say that it’s best to be the first person in to pre-empt before everyone else knows about it. For a marketed listing, I prefer to be the last buyer, after the whole marketing process has taken place.
Expired Listings
Another category to look for involves a seller who wants to transact, even though their marketed deal has expired. Property listings typically have expiration dates included, and if they don’t sell within the given timeframe, they are called “expired listings.” Even though the broker who had the listing may have lost it, there could be old information available to see. If you find it, you could reach out and make an offer after the listing has expired.
When starting out, follow sites that list properties online and track the opportunities. Talk to brokers to see what’s on the market, and if any listings fit what you’re interested in. Off market properties may be harder to spot, though they could also have the potential for a great return if you carry out due diligence first.
Read the full article here