I tried the Real Estate market again recently. It is still active, and so difficult to find many bargains. But I am usually looking for the property that few others want. Usually, I can get a good deal because it is too much work for most people. But even these properties are higher priced than they are worth. Any good Real Estate Investing course will tell you that you make your money when you BUY. Because it is the only deal that you have control over.
My dad gave me the best real estate advice there is, when I was looking for my first house. “Any property is worth what someone is will to pay for it. Does not matter if you are buying or selling.” It is true, except people forget that it really works.
The housing market boom in recent years, that has scared the government, could have been avoided if people remembered the rule my dad gave me. But sometimes you can’t.
Buying a property when you are desperate is a bad idea. I have done it once. I paid 15% more for the house than I should have. Knowing the rule, why (like many people) did I still pay too much? Because, like many people, I was under pressure to buy something. We were living in a Summer cottage, with winter on the way, and I needed something big enough to house my wife and I, my mother in law, my youngest son, and my daughter and her daughter. (They were not living in the cottage at the time.)
There were very few listings that matched our requirements so I wound up spending way more than the property was worth. I wound up selling the house for substantially less than I bought it for, after putting a lot of money into it. The outcome was bound to happen because, I paid too much in the first place. It was also the property I bought using the worst Real Estate Agent, I have ever worked with. It just proves that you pay for your education somehow. I learned a couple of good lessons from that deal. Those lessons have become Rules.
- Try not to buy in desperation.
- Always use a GOOD agent.
- Never sign a Buyers Representation Agreement for more than the property you are making the offer on.
- Never sign a Buyers Representation Agreement for longer than 30 days.
- Never sign the agreement before you are ready to make an offer.
- Never pay too much!! (Unless you don’t have a choice. And you always have a choice. They just may not be pleasant ones.)
I recently tried a new agent. I went into an office and asked for an experienced agent. If I do that again, I will ask a more specific question. “I would like to talk to an Agent that has sold Commercial property, Investment property, Vacant land, and has/is working with small Real Estate investors. They have to have Sold at least 30 properties.”
I was introduced to an agent and we started the interview. I laid out a few ground rules, beginning with rules 3,4,5, and 6 above, along with, I do not get into bidding wars, if things work out, I will use them to Buy and Sell property, and how do they feel about making “low ball” offers? I also need to know how they will react to the fact that I will review 50 listings, ask for details on 20 of them, probably go see 10 of those, and maybe make an offer on one of them. I ask that, because that scenario, takes a lot of an agent’s time.
Long story short, the agent was not bad, but was more inexperienced than I hoped, and less willing to listen to suggestions. They insulted my integrity more than once, and made it clear how expensive it was to keep having to drive to show me properties without a signed Buyers Agreement. I stuck with them through to making an offer. It was a difficult offer on a difficult property. We discussed a presentation strategy that I felt was necessary due to the complexities of the property and the offer. The offer was very low compared to the Asking Price, because of the realities of the property. I was assured that there would be no problems using a more stream lined offer process. The offer was not accepted. There was not even a Sign back. I was very disappointed, because I had invested a lot of time, and money, into due diligence on the property. So, it was a lose/lose/lose situation. I didn’t get the property, the agents got no commission, and seller got no money.
Needless to say, I have gone back to using my regular agent even though they do not normally work in the area where I am looking at property. This experience has taught me another lesson.
DON’T BREAK THE 6 RULES!!!
No matter what the market is doing, there are always deals out there. Patience, and the 6 rules, will help you find them.