Deal or No Deal?

Dear Everyone,

I looked at a house over the weekend. Here are some of the things that went through my head while I was looking:

Exit Strategy

I begin with the end in mind, forming the strategy before I ever step inside the property. That way, I can think about ways to execute that strategy while looking at the property. I can also see if the property condition is a match with the exit strategy. The strategy for this property was wholesaling--sign a contract with the seller, then find another investor to purchase the contract.

Property Condition

The property is an older home owned by an elderly gentleman who wants to downsize. I looked first at the items that can be costly and scare off buyers--the age of the roof and windows; potential water problems in the basement; telltale cracks in walls that hint at foundation problems; and general condition of electrical wiring and plumbing. Then I attend to features that help sell the home. That's why knowing the exit strategy is so important. If I'm going to be selling to another investor, I have to think like an investor while looking at the property. If I'm going to sell to a homeowner, then I have to think differently.

Neighborhood Condition

It doesn't matter if I find the perfect property if it's located in a neighborhood where no one wants to live. I drove around the neighborhood both before and after looking at the property. There were both positive and negative findings. It was an old neighborhood with some boarded-up properties. I noted some individuals several blocks over who were engaged in questionable activities. On the other hand, the property is located across the street from a school; there is new condo construction nearby; and a neighborhood of expensive homes within a few blocks.

Conclusion

The seller passed on my offer. Property values in the neighborhood are low, so I had to make my offer accordingly. Sellers sometimes get excited when a real estate investor shows interest in their home. They start seeing infinite dollar signs and thinking, "I could do that. I could sell my own home." And they are correct. They could sell their own home. Oftentimes, they do not. "No" is frequently "no for now." I will stay in touch with the seller. We could do business in a month or so.

Elaine