How to Buy Fixers for Profit
by Jeanette Fisher
Published on this site: September 20th, 2005 - See
more articles from this month
Do you dream of becoming a wealthy real estate investor?
Here's how to get on track: find a "fixer-upper"
deal offered by a troubled home seller. You may have seen
ads for "ugly" houses. Often these "tired"
houses need only cosmetic work in order to compete for resale
with other homes in the area.
Home sellers find it difficult to sell a "fixer-upper"
or an "ugly doghouse." These neglected houses scare
away most home buyers, who don't have the money to cover the
down payment, closing costs, carpeting, appliances, and other
overdue repairs required to bring the home back into shape.
Even if they have sufficient money, most home buyers don't
have the motivation to fix the problems.
Find a "Triple-D" Bargain Home sellers with three
problems frequently hand over deals to real estate investors.
A "Triple-D" deal is a Doghouse, involved in a Divorce,
and in Default. The label "doghouse" comes from
Southern California real estate agents who described the worst
fixers this way. As you look through the classified ads or
at real estate listings, keep an eye out for terms like "handyman
special," "as is," "fixer," "must
sell," or other revealing phrase. Ask your real estate
agent to look for these tell-tale words when searching the
Multiple Listing Service for you.
Why Sellers Offer Bargain Prices
Home owners' troubles often keep them from staying on top
of their home's maintenance. Problems like employment loss,
divorce, devastating illness, addictions, or other personal
problems quickly defeat distraught home owners, forcing them
to sell. These home owners can't keep up with monthly mortgage payments and repairs because of financial or physical limitations.
When these difficulties get out of control, their home becomes
a low priority and often goes into foreclosure.
How to Complete a Fast Sale
Once you've found a property that you can change from doghouse
to dollhouse, uncover the seller's problem and then offer
them a solution. Home sellers with problems commonly experience
financial woes; they need cash immediately. Investors ready
to close swiftly set themselves up to negotiate a lower sales price. Distraught sellers love it when an offer to purchase
says "close in 7-14 days." The seller may need to
get money right away and still stay in the house while they
find a place to move to.
Find a knowledgeable mortgage lender and get yourself not
only "pre-qualified," but also "pre-approved."
Taking that second step reassures concerned sellers that you
already have your loan in place for their property. Also,
use a veteran closing or escrow agent who knows what they're
doing; one not too busy to close right away. Even in today's
active real estate market, if your financing is in place,
you can find closing agent who can help you close fast.
Once you've found a potential dollhouse owned by a distraught
home seller and you have your financing set up, you're on
your way to becoming a wealthy real estate investor.
Jeanette Fisher, author of "Doghouse to Dollhouse
for Dollars," "Credit Help! Get the Credit You Need
to Buy Real Estate," and other books, teaches real estate
and interior design. For more articles on fixers see http://www.doghousetodollhousefordollars.com/
If you need help with credit to finance multiple properties,
visit the Real Estate Credit Help Center at http://recredithelp.com/
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