How To Buy Real Estate Below Market Price
One of the most important lessons to remember in any kind of investing is this – “The profit is in the buy.” This means that don’t buy something and hope the price will go up in the future to make a profit. The better solution is to buy something below market price and sell it a higher price. So, how can we apply this lesson in real estate? In this article, we are going to discuss 3 tips on how you can buy a real estate below the market price.
One of the best ways to buy a real estate below market price and without a lot of hassle is to look for desperate sellers.
Desperate sellers want a quick sale, and that usually means they are okay to sell a property at a lower price. Why would anyone want to sell a property at a lower price anyway?
There are a lot of scenarios that can happen that results to a desperate seller. For example, a seller wants to move to another location or country. These kinds of sellers are not trying to make a profit. They simply want to move to the new place and be done with the old place.
Another example is couples that are going through a divorce. Most of the time, neither of the two wants to stay at the old place. Hence, they simply want to get rid of the property so they can split the cash. Desperate sellers are your best option, but sometimes, these kinds of sellers are uncommon. Thankfully, you have other avenues for getting a property below market value.
People usually loan money from a bank to pay for a property. Also, this means paying the bank regularly. However, there are instances in a homeowner’s life that causes a drastic change in the finances. The worst case scenario is they default on the loan, and the bank forecloses the property.
Keep in mind that the bank is not in the real estate business. They are more interested in loaning money and getting their interest paid. In fact, for them, a foreclosed property means that they have money tied in the property instead of using the same money to loan to someone else and collect interest. You can say that they also want a quick sale, and that means accepting lower prices.
Hence, check the banks in your area to see if they have foreclosed properties they want to dispose of.
This technique involves identifying homeowners that are in the situation of having a hard time paying their mortgage.
Homeowners know that when they are unable to pay the mortgage, the bank will simply foreclose the property. In most cases, this also means forfeiting their equity.
What you can do is to contact these kinds of homeowners and offer to buy their equity at a lower price. If they agree, then you pay off their equity, and you carry the existing loan. If you do the math right, you can end up with a property that you paid for less than market value.
There are a lot of techniques you can employ so you can acquire a property below market value. For starters, you can try the tips mentioned above such as looking for desperate sellers, checking foreclosed properties and finding financially troubled homeowners.