House Buying, Simplified

Buying a house is one of the nation's most common large-scale financial transactions

. Still, there are a great many financial hoops you have to jump through in order to strike a deal. As a result, experience is often the best teacher when it comes to purchasing properties.

The median price range in the areas that I tend to buy in is $125,000 to $140,000. When it comes to purchasing homes, I do not want to deal with a property below $75,000. That's because lower-priced properties involve added expenses which make buying the homes unprofitable. There is simply too much baggage involved in handling and re-selling such homes.

My exit strategy is to buy, fix, and sell homes for retail for all cash or to sell on a land contract or lease option. The higher the price of the property, the more money I will make. As a result, my company has quit buying at the lower end of the spectrum.

If a property owner comes to me and wants to sell his or her house for all cash, there's a certain tried-and-true process to follow. We do what's called a 'purchase and sell.' In this case, buyer and seller have a meeting of the minds on terms, price, whether the seller will be getting all cash, and whether the seller will be receiving any cash up front. Sometimes the seller asks for earnest money up front, sometimes they don't. Typically, if the seller doesn't mention earnest money, I give him or her $1 or $10 as a demonstration of good faith.

With REOs through a realtor, my company will typically be asked for $500 or $1,000 in earnest money, which is not unreasonable, given the economic climate in which we live.

After the purchase and sell, my attorney should do a title check on the property to make sure that the title is free and clear. Otherwise, we might have great difficulty with the purchasing process. Generally speaking, if we have an offer accepted on a Monday, we can close on a Friday. This demonstrates how streamlined the process actually is and how speedy the transaction can be.

Certainly, there are a number of financial factors to take care of when buying houses. Thankfully, my team has the experience to know where the pitfalls might come, and to plan accordingly.

by: Alan Cowgill

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