I woke up the other morning, unusually early, and flipped on the TV to check the weather. A show was on with gorgeous folks sitting in front of a dock full of big houseboats and yachts. Excitedly, each one explained how they'd made thousands, sometimes tens of thousands, of dollars, with no money down on real estate deals. Of course, I watched. I'm in real estate. I want to know how to make 150K in an hour. 'Cause right now I'm not.
Well, here you go. You buy distressed properties for, oh, say $5000. You turn around and sell them for $155,000. You just made $150,000!!!! See? You are rich!!!
So...what am I missing here?
Oh, yeah, the part about the $5000 property. There's no such thing!! Ha! Ha! Gotcha!!!
Seriously, there are distressed properties and they are cheap. But the hoops you have to jump through to buy these properties are many. Then there is the rehab you'll have to do on the house. There's no disclosure, so you have no idea what could be wrong. And what could be wrong is alot. But the truth is, there is no $5000 property that you can turn around immediately and sell for more than, oh, maybe, $5005.
What the host of the show is good at is marketing all right. Marketing his book. See, he wants to share this wonderful knowledge with all of us poor folks and make us all rich. Right. He wants to sell a book or hundred, that's what he wants to do.
In the meantime, ordinary folks who watch these kinds of infomercials, figure that if a foreclosure is listed at, say, for example, $150,000, the bank will just be all over an offer of $60,000. Really. True enough, the banks and lenders do not want to be in the real estate business. They have no desire to maintain an inventory of vacant properties. But they also know to price a property to sell. Yes, they will sometimes take less just to get rid of the property. But, it won't be a 75% off fire sale. This ain't Kmart.
If I were in the market right now, knowing what I know, seeing what I've seen, if I saw a property I wanted in the price range I want to spend, I'd put a reasonable offer in (note: I said reasonable, not insulting). And if it was truly what I wanted in my price range, I'd put in a full asking price offer. Because, if it's what I want at what I want to spend, why not?
So, if you're in the market to buy, remember, good deals are everywhere. Heck, great deals are everywhere. And in this market, most are already priced to sell quickly. Make an offer, but keep it real, friend.
And...next time you see that infomercial...flip to something more realistic, like "I Dream of Jeannie".