How to Locate Properties (Part 1 - For Sale By Owner Sites)

Hello everyone, this is Bill Flood, and welcome to another edition of the Coast to Coast Real Estate Investor.

Today I am going to start a multi-part series on where to locate properties across the country. Let me begin by saying that as you start using any of the resources I’m providing - or any other - your ultimate job is to get to know the market in which you are investing. Don’t try to shortcut that by using a website! Your job is to look, and look, and look, and to research, and then research some more to get a clear understanding of prices, values, best communities in which to invest, and what’s happening in a given market.

Don’t jump into some deal prematurely without having a real good sense of where you are planning to buy. Don’t take anyone’s word that a property is worth a certain amount. Basically, don’t make the speculator’s mistake of buying anything just because you can.

For Sale By Owner Properties and For Sale By Owner Sites
I’m going to begin this series by discussing For Sale By Owner (FSBO) resources. I’m placing it at the top for a reason. In my opinion, working deals that don’t involve real estate agents gives you various advantages.

First, since a real estate commission is not involved, you don’t have that 6% or 7% complicating the deal. Often, when you see someone who is otherwise flexible and motivated when selling their property, it’s the closing costs, and in particular the real estate commission that they can’t afford to pay out of their bank account. So their price and/or terms will reflect the need to recap the real estate commission from the property’s equity. I’ve come across scores of deals in which the owner would virtually give away the house, or finance 100%, except they need an amount to cover closing and commissions. Keep in mind, that on a $150,000 house, that can represent $15,000, so we’re not talking about a small amount of change! When it’s for sale by owner, you bypass most of that challenge.

The second reason why I like for sale by owner situations is that you are dealing with the seller directly. If you are good with people – if you learn how to build rapport and dialogue with sellers it helps you put together deals. Agents are not typically going to disclose a seller’s situation, so when you can deal with an owner directly you have the benefit of diplomatically inquiring about the seller’s situation. A skilled investor will always dig into the situation of the seller – more so than the property itself. As the old saying goes, the deal is in the situation, not the property. When you find a motivated seller - perhaps someone who has relocated out of state, is in financial difficulty, divorcing, etc. - you are in a position to help them and put together a fantastic deal for yourself.

By way of example, let's say you've come across a seller who bought a property a year ago and was suddenly transferred to another state. They can't afford two house payments, have bled their bank account low, and are getting dangerously close to a foreclosure situation. The problem is, they no longer have the $12,000 to pay a real estate commission and closing costs. So, they try the FSBO route. What's really hurting them is the extra set of payments. Perhaps you could come in and offer a rent with option to buy or lease purchase arrangement (more on those in an upcoming edition on financing) or simply take over their payments (called a subject-to deal). Your solution would take the burden of the payments off their hands while getting you into a deal with little or no upfront money. It's truly a win-win situation!

One of my best deals - actually one of my first out of state purchases was a FSBO, in a situation very near to what I just described. I can't overemphasize how valuable the for sale by owner situation can be.

With all that in mind, here are some FSBO resources.

Two of the top FSBO sites are:

www.Buyowner.com
www.Forsalebyowner.com

There are others like www.FSBO.com and www.byowner.com. FSBO sites are pretty prolific, but the first two are really solid contenders with thousands of listings across the country. It’s also worth mentioning that there are FSBO guides you can pick up in cities when you travel.

In the next edition I will be covering the wealth of classified advertising that's available across the country both in print and online.

Until then,
Live Your Real Estate Dreams