 In many parts of the country rehabbers are having problems selling their inventories because of new problems they haven't faced in years. Concern is growing among rehabbers with 2- 5+ properties in inventory that they may get stuck in these properties and lose money when their homes are finally sold. A little planning on four of the largest issues can make the difference between success and failure. Slot Game Online.
The largest issues rehabbers are facing include: 1. Appraisers are more often using distressed property sales, including short sales and REOs, as comparable sales. a. Find your own comps that are not distressed sales and show the appraiser. Keep this problem in mind when you purchase your next property so you aren't turning out a beautiful property but it has to be sold above market value for you to break-even. Slot Game Online. b. If the buyer is financing FHA, make sure an appraisal is high enough before you get an official one from FHA. This FHA appraisal "sticks" to the property and won't go away for another FHA buyer. 2. Lenders still seem to be unwilling to make loans to buyers. a. The major mortgage insurers, FNMA and Freddie Mac, have dropped their seasoning requirements but the front-line lenders continue to have 90 or more days as a seasoning requirement. The major reason is because of liquidity and cash requirements needed by the lenders. Slot Game Online. b. A simple solution is to review the buyer's credit, cash for closing and make sure he doesn't buy or charge any major items such as appliances or an auto before the closing. Almost all lenders are now pulling the buyer's credit twice, once in the beginning of the loan application phase and again the day before or the day of the closing. 3. Many rehabbers are buying REOs on their initial offerings and paying too much money. a. A general belief by investors is that newly priced REOs are the best deals around and these investors are getting into a bidding frenzy with themselves. The rehabber wants the property and keeps bidding way beyond sensibilities. b. The solution is to bid effectively on more properties and not get caught in the feeding frenzy to get a deal. Currently there are ten times as many properties that are or will become an REO in the coming year. 4. This is the one you don't want to hear - the market is still declining in many areas of the country and may do so for 2 - 3 years. Slot Game Online. a. Despite the glowing reports from various sources, there are too many properties that must come to market and too few buyers. Looking at what are defined as "distressed", those properties that are already REOs or where Lis Pendens have been served, combined with homeowners who are Upside-down, Not in Foreclosure, but their homes are Not Yet For Sale, this shadow market represents one in four homes in our area. b. Having said that, I believe that an investor is currently faced with potentially the most profitable market in the last 50+ years if he approaches it properly. Besides the above solutions here are a few more A. Selling a rehabbed or wholesale property is similar. Both require the property be sold as quickly as possible for maximum profit and to not lose a sale. Ironically, while the condition of the property matters, the marketing of the property is 100 times more important. This may seem illogical at first, but it is the reality. The more you market the property, the closer you are to a buyer who will buy it because of price, or because he falls in love with some aspect of it and pays over market value for it. Slot Game Online. B. Here is the heart-stopper, the MLS is a glass ceiling and the nearly worst place to advertise it, plus it costs the most. Realtors won't like that but it is the reality of the way the MLS and its listing structure work. Learn to use marketing methods that reach motivated buyers for the specific type of property you are marketing. Slot Game Online. C. Use a modified round-robin auction system that stresses the property, whatever its condition, must be sold and quickly. This method if properly marketed can bring in as many as 25 to 75 times the number of prospects that traditional Open Houses do for realtors. The prospects are bidding against one another and the final result is the real market value of the property. D. Build a buyers list so that you have buyers for your next wholesale or retail sale. This can be done by reselling the same properties after they are under contract for backup and future buyers of other properties. Your power as an investor is the depth of your buyers list, the bigger the better. In summary, don't be discouraged about what the market is doing or where it is going. You can make money in any market as long as you limit your losses and sell as quickly as possible. In future months or years, it may be easier to hold out for higher prices but until the country's burdensome inventory is financed by lenders, you need to sell fast and be very selective about the next property you purchase for rehabbing. Read More About Property News
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