Finding Investment Homes To Buy When Inventory Is Tight

Small foreclosure investors, home buyers and other players have a real challenge finding houses suitable for their investment portfolios. Housing inventory levels teeter at ten-year lows.

When a buyer finds a home that meets their criteria— foreclosures, short sales or traditional real estate listed on MLSs, chances are that they will find themselves bidding against multiple buyers often driving the final sales price above the listing pricing.

The available housing stock is 40 percent less than it recorded over two years ago. Entry level homes, which fall in the mid-pricing scale, are particularly in short supply. In many areas of the country, the gap between foreclosed home prices and market prices narrowed.

With interest rate hovering near historic lows, the demand for housing has put pressure on home values. Values have increased an average of 10 percent over the last year.

Here are tips for adding to your available inventory of homes in a tight market.

1) You need a good real estate agent on your team

Make sure you have a real estate agent who understands your basic investment criteria for foreclosure properties, short sales and other cheap houses. A real estate pro brings a lot to your team.

Besides possessing knowledge on the local market—locations, schools, areas to avoid, recommend tenants and other expertise—the right agent can also be an invaluable source for the inside track on listings before the homes hit the market.

If you link up with a foreclosed homes specialist you can really score big. Receiving advance leads on listings improve your chances of consummating real estate investment transactions before the competition have wind and makes competing offers.

2) Work for Sale by Owners (FSBOs)

About ten percent of the residential sales transactions today are FSOBs deals. Many owners have strong motivation for selling like death, divorce or foreclosure—and they do not want to pay a real estate broker commission. With an average commission rate of 6 percent, the seller pays $12,000 on a $200,000 transaction.

For sale by owners are easy to find. Just drive through the neighborhood on the lookout for yard signs. You can also use the Internet to locate FSBOs and websites like Trulia, Yahoo and Zillow.

3)Focus on expired listings

Many real estate agents routinely go through MLS expired listings to find sellers. If you willing to go the extra mile, “expired listing “can provide you another source of housing inventory, but with far less competition.

Keep in mind that that the contract between the real estate broker and seller expired for any number of reasons—house price poorly, the home needs renovating and other reason.

Concentrate on the most recently expired listings. Many of these people may be frustrated or angry, but still want to sell their property.

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