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Buying and Selling Distressed Houses for Maximum Profit (Update)
If you want to become a real estate investor, find a "fixer-upper" owned by an anxious seller. Finding distressed houses at bargain prices, fixing them up, and then selling them on a consistent basis can make you a multi-millionaire. Why Sellers Sell At a Discount Home owners' problems often prevent them from staying on top of their home's upkeep. Factors such as job loss, divorce, serious illness, various addictions, or other personal problems quickly overwhelm distressed home owners, forcing them to sell. These sellers can't make the needed repairs because of financial or physical limitations, and when that happens, their home becomes a low priority and sometimes will go into foreclosure. Look for the "Triple D" Home sellers with three problems give beginning investors a great opportunity. A "Triple D" is a Doghouse, involved in a Divorce, and in Default. The label "doghouse" comes from Southern California Realtors who used this term to describe the worst fixers. These houses maybe "tired" and need only cosmetic work in order to favorably compare with other homes in the area. What to Look for in a Doghouse The hardest house for a homeowner to sell is a "doghouse," "dump," or "fixer-upper." These run-down houses scare off most buyers, who don't have the money to cover the down payment, closing costs, new furniture, carpeting, appliances, roof repairs, and other deferred maintenance required to bring the home back into top condition. As you look through the classified ads or at Realtor listings, keep an eye out for terms like "handyman special," "as is," "fixer," or other tell-tale words. Also have your agent use similar terms when scanning the Multiple Listing Service for your target area. Once you've found a property that you can turn from doghouse to dollhouse, find out the seller's problem and then offer a solution. Distressed sellers frequently experience financial problems and need cash as soon as possible. Therefore, if you're ready to close quickly, you'll be set to negotiate a lower sales price. How to Close Quickly Find an experienced lender and get yourself not only "pre-qualified," but also "pre-approved." Taking that second step assures worried sellers that you already have your loan in place for their property, and this puts you well ahead of other potential buyers. How to Know When "Bad" Is Good When you first start out in the real estate "fixer" business, you'll want to look for "ugly" houses needing only cosmetic work. Look for entry level fixers that just need some cleaning up, painting, and carpeting. When you're new to the fixer business, always remember your limitations and use caution when considering houses needing structural repairs. My husband replaces structural beams, sub-flooring, walls, plumbing, and electrical systems, but he acquired those skills after years of experience. If you find a house with structural problems, get estimates from reliable contractors to do the work. Experience teaches you how to do more over time. Until then, rely on experienced professionals to do the repairs. Take professional estimates into account before deciding whether or not to purchase an investment property. The Easiest Houses to Sell A dollhouse, located in a popular neighborhood, sells the quickest. For instance, we once sold a home we named "Orange Tree Cottage" in just three hours! To qualify as a dollhouse, a home must be in a location that buyers want and must offer the number of bedrooms, bathrooms, and amenities they're seeking. Beyond the price, however, buyers purchase the house that meets both their basic requirements and their emotional needs. Filling Buyers' Emotional Needs After many years of investment experience, we've found that using Design Psychology and Marketing Psychology techniques greatly increases our profits. Both concepts go far beyond "curb appeal." For instance, we use colors that target our prospective buyer's income level and match the selling season. Generally, buyers of higher-priced homes prefer complex colors. And using cool colors during hot weather and warm colors in cold seasons makes buyers feel like they've found an oasis or sheltering haven. We also paint the front door a happy color and entice buyers into the house by placing potted plants on the porch. Once inside, we use home staging strategies to create a buyers' dream home. We don't use a lot of furniture; just a few accessories to suggest happy activities. The idea is to make the buyers believe that if they buy your home, they'll enjoy a new lifestyle. Over the years, we've bought and sold dozens of distressed properties. By using caution and common sense, as well as following a few simple rules and using Design Psychology strategies, you, too, can become a wealthy real estate investor! (c) Copyright 2005 Jeanette J. Fisher. All rights reserved. Professor Jeanette Fisher, author of Doghouse to Dollhouse for Dollars: Using Design Psychology to Increase Real Estate Profits, Sell Your Home for Top Dollar--FAST, Home Staging, and other books teaches Real Estate Investing and Design Psychology. For more articles, tips, newsletters, and blogs for your questions, see http://www.doghousetodollhousefordollars.com/
MORE RESOURCES: Why This Real-Estate Investor Favors Commercial Vs. Residential Business Insider Wall Street's Most Accurate Analysts Say Hold These 3 Real Estate Stocks With Over 4% Dividend Yields Markets Insider Top real-estate CEO sees decades of housing pain ahead: 'What the Fed did will have a 30-year tail on it' Yahoo Finance Landmark Settlement Breaks Up the Real Estate Cartel The American Prospect Who are real estate lobbyists talking to in New York? City & State New York Public records: Coshocton County, Ohio, real estate transfers Coshocton Tribune Brockton-area real estate sales for Dec. 26 to Dec. 29, 2023. Enterprise News The End of the Super Broker Era in Commercial Real Estate Commercial Observer Real estate shake-up: Possible commission changes ahead 11Alive.com WXIA Real Estate Commissions Are About to Get Much Cheaper. Here's How Zillow, Redfin, and Opendoor Could Be Affected. The Motley Fool Local real estate agents abuzz over proposed commission changes - LVB Lehigh Valley Business On Real Estate: The confusing and contradictory state of post-pandemic retail Crain's New York Business Miami Beach real estate investor under investigation for firing shotgun from waterfront home WSVN 7News | Miami News, Weather, Sports | Fort Lauderdale REAL ESTATE | New signage for Auto Safety Center on S. Main Street, West Bend, Wi washingtoncountyinsider.com A luxury agent on how the NAR settlement will change his business The Washington Post WORLD PROPERTY VENTURES: The 'DARPA of Real Estate' Announces New Digital Initiatives The World Property Journal Knoxville School Board to Hold Several Public Hearings Regarding Real Estate Parcels KNIA KRLS Radio Cities Face Cutbacks as Commercial Real Estate Prices Tumble The New York Times The Realtors' Big Defeat The New York Times Realtor group will pay $418M to settle commission lawsuits The Associated Press How new real estate rules may impact home prices in Connecticut Eyewitness News 3 Settlement will affect Iowa homebuyers KCCI Des Moines Israeli real estate event: Legal complaints escalate NorthJersey.com China's Real-Estate Market Just Set a Record—but Not a Good One The Wall Street Journal Is the Era of the Celebrity Real Estate Agent Over? Industry Reacts to Settlement That Could Slash Commissions Hollywood Reporter What the death of the 6% real estate commission means in D-FW The Dallas Morning News What Seattle-area homebuyers should expect after national settlement The Seattle Times Hocking County real estate transfers | News | logandaily.com Logan Daily News National Association of Realtors Agrees to Slash Commissions to Settle Lawsuits - The New York Times Realtors Reckon With a Seismic Shift to How They Get Paid The Wall Street Journal Realtors settlement brings confusion, relief to Southern California’s real estate industry OCRegister Realtors Reach Settlement That Will Change How Americans Buy and Sell Homes The Wall Street Journal California, United States Luxury Real Estate Home California Listings Making Sense of New York's Confusing Luxury Home Market The Wall Street Journal A commission settlement may affect housing market 9News.com KUSA End of 6% real estate commissions could mean lower home prices The Atlanta Journal Constitution National Association of Realtors to cut commissions to settle lawsuits. Here's the financial impact. CBS News A Look Into the Future of Home Buyers' Agent Commissions The Wall Street Journal Once America's Hottest Housing Market, Austin Is Running in Reverse The Wall Street Journal Chicago Voters Face Choice on Tax to Fund Homeless Programs The New York Times Yoon to scrap 'reckless' plan to raise declared real estate value The Korea JoongAng Daily Wilmington realtor weighs in on proposed changes to real estate industry following major settlement WECT Blackstone, World's Top Alternative Asset Manager, Eyes Record Highs Amid Real Estate Bottom Investor's Business Daily Bridgemarq Real Estate Services (TSE:BRE) Share Price Passes Above Two Hundred Day Moving Average of $12.93 Defense World 4 Ways a Settlement Could Change the Housing Industry The New York Times Colony Ridge violated deceptive trade practices, Texas says The Texas Tribune Real Estate Stocks Drop As NAR Agrees to $418 Million Settlement Markets Insider Revolutionizing Real Estate Lead Generation: Stephen Zochowski's Groundbreaking New Book 24-7 Press Release What will the Realtors settlement mean for Arizona homebuyers? The Arizona Republic Real Estate Credit Investments (LON:RECI) Shares Pass Below 200 Day Moving Average of $126.75 Defense World |
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