Eighty percent (80%) of all homes sold are sold to first-time home buyers who are either a neighbor or someone recommended by a neighbor. These people want a 3-bedroom home with more than one bathroom. They prefer ranch style, low-rise bungalows without steps between living areas. In particular, buyers want larger kitchens that open into a family room that exits directly to the back yard onto a slab or a deck.
It does us no good as a wholesaler or even a rehabber to buy a property that people don’t want. It’s not only okay to find deals that need a lot of work; it is preferable, provided the finished property meets the criterion above. Successful rehabbers and wholesalers tend to work in areas where homes are selling quickly but this home has some issues. There are issues that you want and issues you want to stay away from.
You want a property that is regular for the neighborhood but needs work. Please realize that when a property has serious FHA failure points and code violations it will not fetch a mortgage. Unless an interested home-buyer has cash, they won’t be able to buy this home. Hence, you will only need to compete with other investors and that is what you want.
Another criterion that offers a better chance of obtaining a good deal is finding a property that is vacant. Many top investors only work with properties that are vacant. Because no one is gaining any value from a vacant property, it is likely that the buyer doesn’t want it. But, there are other indications of someone not wanting their property. Those include debt, disease, death, divorce, and having to move to another area some distance away.
Knowing which kind of lists to use, where to find them, and how to find the best deals within the lists, can be critical. Real Estate Pro Software can help you find pre-foreclosures, foreclosures and absentee owners who bought multiple properties in each area but live in a different state. Often, these people can become overwhelmed with the task of long distance management and not only can offer good deals but will often owner finance.
If you have RE Pro, just call the advisory line and we will walk you through ways to maximize the data. But if you don’t, everyone has access to Internet websites such as Redfin.com.
Redfin.com provides a simple list that is available to everyone but is seldom used to its maximum potential. Here you can select entire lists by zip code or by area.
Selecting all the Redfin.com properties in Murray, Utah, we find a list of 426 properties/homes. By exporting the entire list to Excel we can begin deleting properties we don’t want to purify our list.
Start by eliminating everything that is not a single-family home and 426 homes becomes 251 homes. This gives you just the easiest homes to sell and the homes that are more predictable price-wise. Homes that are older than 40 years are older than what many people want. Eliminating these older homes also eliminates potential issues with lead paint or asbestos. Eliminate these and you have 113 homes to review.
Homes that have only 1 bathroom can often be slow to sell, so we will eliminate them. Further, since homes with more than 3 bathrooms are not likely to be reviewed by your typical first-time homebuyer, we will eliminate those. This gives you 44 homes to review. In our list, we had 4 homes that slipped through without an address. Hence, we now have 40 homes.
After sorting by square feet, we will eliminate any homes that are over 2000 square feet, as they are often too big for almost all first-time homebuyers. In this list, you will have only 5 properties to review. In many areas, you can sort alphabetically by location and find unsafe “location” areas to eliminate. There were no unsafe areas in this particular list.
Lists will not always reduce down as dramatically as this one did here. Hence, the next item we can review is the price per square foot. This item may require inserting another field and dividing the price by the number of square feet but it will provide you with properties with the best potential to be a good deal.
Price is always important, but when you are wholesaling, it is critical because we have added ourselves yet another expense. Hence, what we bring to the table is the ability to know what is a good deal and to find those good deals for our buyers.