Making the Most of the Distressed Deals in Your Area

Making the Most of the Distressed Deals in Your Area

Many people chose to use the MLS or multiple listing services as a way to find a new house. Most of the time, this is a fantastic move; however sometimes the best homes never make the listing service. The best way to find those houses is a process most successful real estate investors call "Driving for Dollars". It is as simplistic as it sounds, and easy to do.

Not only is the name easy to remember, but the actions needed are simple as well. The whole idea is to travel a different way home one day a week, and take a look at the new area that you're driving through. You might run across a home that has been neglected, and that is exactly what you are searching for. More often than not, properties like this are old rental houses that have been abandoned, or where the residing owner simply can't keep up with the bills. These buildings may not be on the market yet, but if you work diligently, you'll most likely get them at a lower rate when they do come on the market. There are easy ways to help you get ahead of the real estate investing world. Here are a few to get you started.

One of the best things to do is find out about the properties. The trick is to take the time to look at the houses and record the condition of the paint, the windows, and lawns in addition to the house number. It's best not to contact the home owner at that time. Go to your local courthouse, or build a good relationship with a Title Rep in your area so he/she can pull an "Ownership and Encumbrance" report on that property. AN ownership & encumbrance report is more commonly known as an "O&E", and what it will tell you is how much is owed on the home. If the amount owed is more than the value of the home, it's better to move on. Unless you want to deal with the complications of foreclosure or a short sale, then these properties might not be the best choice.

Sometimes it is valuable to find prospects that allow for a little give and take. It may be a better plan to find houses that provide a more stable equity than not. In most cases, you want to only work with houses that owe less than the overall assessed value. One would think that the properties in question would be sold at fair market value, but this isn't always the case. People tend to consider other options when they are in financial straits. Sometimes the home owner is facing foreclosure, and need to get a fairly large sum of money in a relatively quick amount of time. This is where timing can be so important. If done correctly, you get a great deal on the property, and the property owner gets to stay out of debt.

The action of calling the seller must be done carefully. Just because a house is in bad shape, that doesn't necessarily mean it is a distressed property, so don't assume so when you contact the seller. Some sellers simply haven't had the time to put on a new coat of paint. In some cases that overgrown lawn may be due to a sprained ankle, or the unshoveled driveway do to a broken snow shovel. In other examples, the deals are just around the next corner. Just be patient, and treat the seller with the respect they deserve. This isn't a pleasant discussion for anyone. A simple introduction and indication that you are looking for homes in the area is all you need. If the homeowner is interested in your offer, he will let you know. Then it's only a matter of waiting for the sale of the property.

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