Homebuying secrets to steal from flippers
July Buying Advice: Investors have a knack for snagging properties before traditional buyers. So how do they pick which homes to buy, and what other secrets can we learn from them?
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The words "real-estate investor" are enough to make many buyers grit their teeth. With inventory tight, these all-cash rivals are hard to beat when it comes to nabbing properties.
If you can't beat them, you might as well learn from them. How do they pinpoint the best deals? And how can you make your offer stand out from others?
We asked Doug Clark and Mike Baird, the two investor partners behind Spike TV's "Flip Men" reality show, for their tips on navigating the homebuying process intelligently.
In this month's Buying Advice, we'll also look at the kinds of problems a home inspection can turn up, and how having one done can save you money — both at closing and on your utility bills. And we'll check in with the latest housing statistics, which point to a slow but continued recovery. (Bing: Find a home inspector)
A little flippin' advice
For "Flip Men" Clark and Baird, every purchase begins with a lot of homework. "We start by studying the neighborhood," Clark says.
As soon as a traditional listing or foreclosed home becomes available, they scrutinize the surrounding three blocks and look at the following factors:
- How many homes are on the market and how long have they been on the market?
- What condition are these properties in?
- What's in escrow? What have houses nearby sold for in the past 90 days?
Buyers must take the time to learn the marketplace and look at a lot of homes, so they will know real value when they see it. "We see more than 100 homes for every one we buy," Clark says.
But, Baird says, "Most people want to get serious the first day they go out and look at homes."
They say you need to treat homebuying more like dating: See what's out there and figure out what features you like so you can jump when you see the perfect fit.
And in order to move quickly and land that prime piece of property, you must be preapproved for a loan and know what terms you can offer a seller.
- On our blog, 'Listed': With flips flopping, investors becoming landlords
With fewer homes on the market, buyers will often find themselves bidding against several other bidders. Without cash or the ability to offer a much higher price — for fear that a property won't appraise — buyers have to focus on terms that make life easier for the seller.
- Can you get a home inspection and other due diligence done right away?
- Can you close in two weeks?
- Can you put a larger amount of earnest money down to show your commitment to closing the deal?
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On one property the pair flipped recently, they accepted a bid that was $15,000 less than the highest offer because the buyer's agent convinced them they could close quickly.
"You want to make sure you can offer the right terms and conditions and are ready to go," Clark says. And you need to have an experienced agent who can communicate that to sellers.
"Don't just get your relative or your friend from high school [to represent you]; you want someone who really knows the industry," Baird says. So many people, he says, sign a buyers agreement with the first agent they meet, rather than shopping around. Experienced agents who are working full time can get out to — and get you into — properties before other bidders.
Lastly, just as you don't want to settle when you're dating, you don't want to settle when buying a home. Here are a few of the things that could make a home less of a sound investment:
- A "uniquely weird" layout or design.
- A very busy street.
- Safety issues or structural problems.
"If there's anything safety-related [that's wrong with the house], you should walk away," Baird says.
Those safety issues will turn up on a home inspection, so never pass this step up when buying a home.
What do you lose by passing on a home inspection?
We've all heard that having a home inspection is a critical step for buyers before they close a deal. But occasionally a reader will ask what these inspections can turn up, and what you could miss by bypassing one to close quickly.
- MSN Money: Buy less house, not more
The three things you risk are your money, your safety and knowledge of that home's features — including its inefficiencies, says Marvin Goldstein, a Pennsylvania home inspector and president of the American Society of Home Inspectors. "It's one of the few services that will save you more money than you spend," he says of the $400 to $500 inspection.
The last time that I looked, we were still in a "buyer's market." This article is written from the perspective of a "seller's market" and is quite misleading because of it.
What is true, is that if you are competing for a home, the guy with the money always wins.
What is also true, is that unless you are a builder, electrician, and plumber yourself, you need to have a home inspector look at the home.
You do not need a real estate agent to buy a home from an owner or their agent. You need a lender, a real estate attorney - to set up all of the contingencies in your offer, and a title search by a solid title company.
Be very wary of house flippers...not matter how they pump themselves into sainthood. Anyone who doesn't believe this should check out the bunch of swindlers who went to jail in New Jersey for "flipping houses". If it sounds too good to be true, it is. House flipping is yet another gimmicky rip off trick. And in just the past week, 4 major banks were being investigated for fraud.
The government needs to throw these bums in jail. When the government settles for huge sums of money, taxpayers and consumers end up paying for the settlements in higher predatory prices while taxpayers get zapped for subsidies that help these frauds pay settlements from everything but business revenues. You pay your bills first before you dare call it profit. This is what has gone so wrong in business today. Big Businesses taking in billions before they pay their bills and calling it "profit". Then, to make up for settlement losses, they jack prices and we virtually pay their fines for them. We need a law that forces their prices to flatline until these settlements are paid. By them....Not US!
If it is such a "home-buyer secret"-why is this article on MSN?
As the old computer saying goes....garbage in garbage out...same applies to this article......
I really like all of the ads t.v., radio, internet, that some huckster promotes that their top secret system
will bring you untold wealth. Reason me this Batman, if you had a secret system that generates
wealth, I would not tell anyone about it!
If my memory serves me right, isn't this kind of activity one of the reasons the housing market went down.
So, here we are again another bunch of experts that give bad advice to the ill informed.
As soon as your "brother-in-law" thinks he can become a millionaire in real-estate it is time to head for the
This Flip your House Guy is diffently GAY, how long till he comes out?
This was a stupid article, more than half of it was about home inspections..wonder how much
money the author got as a kickback from the home inspection association....
Journalist = advertising whore.