It is therefore important that you pre-screen each deal to find out if it is worth pursuing or toss it.
The following tips will help you weed out bad deals and focus only on money makers.
1) Market Value
You must have a property market value before you can buy it. When buying houses, I try to be conservative so as not to over-estimate the value of the house.
The value shown by the county records is a good estimate in most cases. In most cases, it is lower than reasonable comparable sales in the area. However in a poor house market, depressed house values can be caused by foreclosures in the neighborhood. If you do not have access to your local MLS, it would be advisable to team up with a local realtor who can run comps for you from time to time.
2) Renovation Estimates
Repair is an integral part of buying and selling houses. You must have a fair estimate of the repairs needed without getting down to the nail and bolt. As you get experienced at looking at houses, you can estimate repairs by looking at a house in 5 to 10 minutes.
I try to estimate higher to stay safe.
3) Mortgage Balance
You cannot make an offer on a house unless you know what is owed on it. If the offer you make cannot pay off all the outstanding debts on the property and leave a room for profit, then it is probably not the best deal for you.
If a seller is not motivated enough to provide this information, you better look for another deal.
4) Sale Price
If a motivated seller wants full market value for their property, they are not motivated enough for you. If a seller is looking to get full market value for their house, move on to the next deal. Unless they can leave room for profit for you, then you would better off moving on to the next one.
Sometimes, explaining your numbers to a motivated seller may result in them accepting a rejected offer once they understand how you work.
5) Is It Vacant?
This is just an indicator of how motivated the motivated seller is. If they are making two or more mortgage payments, they must sell fast. It also indicates that you can own the property as soon as buy it.
How do you receive this information?
The easiest way to have this information is to have a good real estate investor web site. The website should pre-educate them how you work and allow them to submit their house information directly on your website.
The form should collect as little information as possible, but just enough to know whether it is a deal or not.
The less information you request the more people are likely to respond via your website. This will save you lots of time because you only talk to motivated sellers whose numbers make sense.
You can then ask them for any information you need as you talk to them.
Simon Macharia is a real estate investor in Dallas, Texas. His business is run from a
real estate investor website that pre-educates motivated sellers delivering pre-screened and pre-negotiated deals.
Click here to see how to pre-screen motivated sellers hands-off.
