Real Estate

Reassess the sales market by area

Think about this: Before closing your property, re-examine your market area as defined by the city and zip code in the immediate area. Ask yourself how much houses have risen in development during construction. Obtain copies of current price sheets from the builder’s model real estate agents. All of these last questions are very important critical points in determining and considering whether or not you have a buy or pass opportunity. Because if it’s not a salable product the day after closing, then you shouldn’t even think about buying the property and signing the loan documents. If the raw data comes back and does not look favorable for the property (that is, it indicates that the property has actually gone up), then you are doing a lot of illusion and it will be a “would have had, could have, should have” -type scenario. And if he walks like a duck, squawks like a duck, and looks like a duck, he’s a duck, which means his planned jump is a laggard and shouldn’t close.

Several other points to consider in determining whether or not to close are as follows: First, the home’s value has increased, but is it real? Is it possible that the builder artificially inflated the price of the development it is in? Or maybe that the surrounding market area for houses of similar size is not compatible with the price of your house? Be aware that prices can be very illusory and can be like seeing a mirage. To combat “price spikes,” a phenomenon in which the developer advances subdivision home prices faster than actual market appreciation, go to a free MLS such as ZipRealty.com or Realty.com. Once there, look on the same street and / or the same zip code area within a one to three mile radius of your subject turn, and see what houses of similar size and age are selling for. Since a public MLS will not display closing data, you can expect at least a 1 to 3 percent variance from the stated sale price vs. the actual closing price. This data, or “comps” as they are called, will help you make a decision about whether or not to buy or walk away from your desired investment. If you are lucky enough to have access to the actual closed comps, go to the MLS and see what has actually been closed and what pending sales there are of similar homes during the last six months. Searching for closed or pending sales may require you to have a license as part of the local MLS where your exchange candidate is domiciled. If not, then go to the internet-based private MLS subscription service that you are using to market your property and apply for compensation, assuming of course that you are already using the business from a previous change. They’re generally quite nice at providing comps, considering you’ve spent $ 195- $ 495 for their services, which mostly consists of uploading some data from the list that takes less than thirty minutes to assemble. They will usually give you a small stack of ten to twenty comps and sometimes that’s part of their service. If you can’t get this kind of data from your subscription service, you probably need to rely on a free MLS (Ziprealty.com or Realty.com), or if you know someone who has access to a local MLS, ask them nicely. .

As for your exchange candidate who has waited patiently for the past few months to materialize, if the market price of your exchange and similar properties is trending up, down, or has not stabilized, these are factors that you will want to consider before closing. And once again, this is the most important decision you will make because if you make a mistake, you will have to live with it. This is not like buying a bad sweater for Christmas and going back to Target to return it for a more attractive sweater. This is a $ 200,000 to $ 400,000 debt that is tied to your financial credit worthiness. And making that kind of mistake and falling behind on this financial asset, which is a very expensive item, can be very serious and stick with it for several years. Remember, what goes up normally can come down! Therefore, it is better to start sooner rather than later with the marketing of your newly acquired flip property. If that change cost you $ 300,000, which you reasonably believe will sell for $ 350,000, then urgency should be your priority. Keep in mind that its value can go down much faster than when it went up. It would be tragic to see the property drop to $ 325,000. Usually this doesn’t happen, but it can. The point is to have a sense of urgency in what you are doing.

Although real estate does not have the same daily volatility as stocks, remember that you are running a trade that requires perfect fluidity to turn your newly acquired investment into an escrow check. So be prepared to market as soon as possible when the property closes. There are many times when I would go out and sign the loan documents, take my tour of the house with the builder, lock up the property the next day, and the next day go out on the property with my laptop. and do a broadcast fax, make an electronic brochure and upload the property to the MLS. In these various steps, you would literally get it to market that same day or within twenty-four hours of closing the property. There were even times when I got a call from the escrow telling me that the property had closed and that I would be at the house site in two hours with a safe deposit box and ready to rock n ‘roll.

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