When I began the journey to find a house to call my home, I told my realtor that I was looking for something cheap. Unlike most individuals who enter the real estate market in their 30’s, I was entering it at 21 years old.
With minimal experience and knowledge of the real estate market, the one thing I was sure of was that I wanted a home that was not going to break my bank. At this stage of my life, I was just making slightly over minimum wage. This was something I made sure my realtor knew because I was buying a cheap home not because I wanted to flip it for more, but instead because it was all that I could afford.
Can you relate?
As someone in real estate, I was fortunate that my first experience allowed me to get a great deal on a home I eventually would renovate and profit from. Buying a home to put money in and hoping to benefit from can be risky, but it became well worth it when I got more than I expected from the sale.
Since then, I have learned that the search for the perfect property requires patience and knowledge of the market. When it comes to real estate, whether it is for your own personal use or investment purposes, patience is vital.
Given the fast-paced changing landscape of the real estate market, finding a property to have a return of investment is sometimes about luck and opportunity. In some parts of the world, the real estate market competitiveness has not slowed even with the world pandemic.
Not only is the availability of homes something to keep in mind, but the understanding of cheap as it is relative to the buyer. One of the most helpful things that a potential buyer can do to help their realtor is to have their cap-off budget. Knowing what they can afford can make the process of searching much more straightforward. Not knowing a price on affordability can make the process of finding a suitable home difficult.
As a successful realtor who has helped all walks of life and budgets, here are a few tips to consider when searching the real estate market for a place to call you own.
Let’s get started!
1. Filter by Price
No matter what website you are planning to use, make sure to filter your house search within your budgetary parameters. From Zillow.com to Realtor.com, both companies can filter from low to high and within a certain amount. What this can do is narrow your price point to an area, which can help narrow your search even more. Not only does filtering homes by price-helpful, but it also helps to know what neighborhoods meet your budgetary requirements. Seeing the different communities can also help understand potential housing price patterns.
What causes a trend of low-price homes?
If we look at the Buffalo, NY market, the median price for a home is roughly around $120,000; however, some homes can go for as low as $75,000. One thing to note is that these prices may not factor in the condition, cost, or neighborhood reputation, all of which can impact the selling-price.
2. Exhaust All Options
When you start searching for a potential home, whether it is for your own needs or to flip for a return on investment, it is important to exhaust all possible options. This means going over potential listings more than once. Coming back multiple times a day opens the possibilities of new listings that may have been uploaded after your original search.
3. Spread Your Bets
In real estate, any good investor knows the rule, 100-10-1. This represents the ratio of 100 houses, 10 offers, and one accepted offer. It can feel daunting and overwhelming seeing a hundred places and then putting in 10 offers. This allows you to hedge your bets.
The key with the multiple offers is, you just never know if your non-conditional or no-financing clause is what gets the seller to pick you. Don’t be afraid to put an offer on the house based on the value of other homes in the area, especially if you think the asking price is higher than others.
If you are not afraid to put in some work and get your hands dirty, consider a fixer-upper. Why? For one, these homes sell for much cheaper than ones that have been upgraded or are in “livable” conditions. Don’t be daunted by a home that needs some work because it could be your entry into the real estate market.
A word of caution though with fixer-uppers, there are hidden risks and possible complications, especially financially. If you are buying a home that needs some repairs, make sure you have saved enough and then some in your repair pot. To help mitigate or reduce any possible surprises, consider having it inspected, and request a copy of the findings.
5. Check Outside the City
Looking for homes in the city is going to naturally lead to higher costs because of the convenience and centrality of significant spots such as schools, shopping centers, groceries, etc. If you are thinking of entering the real estate market for the first time on a limited budget, consider going outside the city limit. In many major metropolitan cities, there are subways and other public transportation modes that can be appealing for those living in suburbia.
When it comes to homes and their price, a general rule of thumb is that the further you are away from the city, the cheaper the homes you are likely to find.
6. Sign Up for Alerts
While it can seem annoying receiving emails from multiple realtors, signing up for potential alerts can help you stay in the loop of a good deal. One way to reduce the alerts you receive is by customizing your alerts to suit your needs. If you are searching for a particular house with a certain number of rooms or want one with a garage, set those parameters, and receive only listings that meet your needs.
Who knows if that next alert is for that dream home or dream fixer-upper.
7. Check Those Homes for Sale by Owner (FSBO)
If you are considering entering the real estate market on your own and without a realtor’s help, consider looking for homes that are For Sale by Owner (FSBO). FSBO homes mean you can negotiate and get personal with the seller.
8. FSBO or REO – Take Your Pick
When it comes to preparing to buy a home, there are two types of dwellings guarantee a great price: the For Sale by Owner (FSBO) or the REO, also known as the Real Estate Owned. REO homes have been foreclosed, and for the most part, require some fixing up. REO homes have also been neglected over time, which means the previous owners either did not have the finances to do the repairs or chose to ignore it.
With an REO, you can definitely expect too much less than most homes in the market.
9. Don’t Be Afraid to Negotiate
When you place one of your many offers, don’t be afraid to negotiate with the realtor or the owner. As someone who has been in the industry for many years and built up my real estate portfolio, it is essential to not be afraid to negotiate the home’s worth and time.
Naturally, a potential seller is going to increase the value of their home in hopes of getting more than they paid for, or at least making back what they put into the house. Using this as a bargaining chip means you are putting a dollar value on your time.
Remember, you should not be afraid to get your hands dirty and fight for what you want when it comes to investing in real estate.
Start the real estate journey today and build your empire!