What is a “distressed” property? What is “bargain” real estate?

A distressed property is one with a distressed seller. Job loss or transfer, divorce, death, pending foreclosure, and lack of money cause sellers to sell quickly for less. Discovering the seller’s problem and finding a solution is the key to buying a bargain property. A distressed property can also be a “doghouse,” a landfill, or a repairman. “Dog kennel” owners aren’t always angsty sellers.

18 easy steps to buy a house at a bargain price

1. Get good advice from successful investors. Ask your friends and real estate agents to recommend investors.

2. Create your personal “Investment Journal,” such as the Doghouse to Dollars Workbook: Turn Yucks Into Bucks Investor’s Guide.

3. Define investment objectives: Do you want to buy a house to live in, repair it and sell it or save it for your future?

4. Get credit reports and scores. Create a file for each credit reporting agency. Take care of any credit issues.

5. Read books and articles on real estate investing. Attend workshops and seminars. Avoid outdated infomercials on TV.

6. Get good advice from lenders. Choose a lender with great service, a good closing record, and fair costs. Arrange financing.

7. Define your target locations: Is the property you want close to your home or work, vacation or second home?

8. Know your target market. Study the sections of real estate newspapers. Collect houses for sale flyers. Look at the sales and write down the prices, amenities and conditions. Follow HUD sales in your area.

9. Interview real estate agents and learn from them. Do not sign any agreements with agents that limit your search for sale properties. (These contracts make you pay a commission to the agent even if you buy by owner.)

10. Use agents who know the customs of the local market and ensure that you get many offers.

11. Find a good escrow officer to buy “for sale by owners.”

12. Study home remodeling, design magazines, and books. Know the costs of materials, supplies and trades. Visit home improvement stores. Take into account the costs of construction materials.

13. Be prepared to know a sale when you see it.

14. Make lots of offers. Make an offer on the rest of HUD.

15. Buy only bargain properties. Get great terms or concessions from the seller.

16. Plan your home transformation during escrow. This speeds up your working time, saving you money on maintenance costs.

17. Oversee the closing of the real estate escrow. Don’t jeopardize your finances by charging credit cards or making unnecessary purchases.

18. Celebrate the purchase of your “doghouse” with an open house!

(c) Copyright 2014, Jeanette J. Fisher. All rights reserved.