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All real estate is too expensive.
There can't possibly be any deals to be found out there if you're a first-time homebuyer, right?
We're always previewing property for clients and because we're always looking at buying another rental property.
Recently, we were looking at condos we are already familiar with.
Here's an example of how we look for good real estate deals in a hot market.
A condo had shown up on our radar about two weeks earlier. And for some reason hadn't sold and in fact, the price was reduced. So we started thinking maybe we can make the numbers work.
I'll share with you the reason why we think this home hadn't sold and a few other things to look for if you're looking for a good deal in real estate.
In general, what it comes down to is if you're looking for a good real estate deal, you have to look for the bad. Bad data, bad photos, and bad condition.
How To Find Good Real Estate Deals
1) Bad Data
If you're looking for a good real estate deal in a red hot seller's market, it's like looking for a needle in a stack of needles.
One of the first things you want to look for is bad data.
You might be wondering, how can data be bad? Data is data, right? Kind of. The problem is that the data that's being entered into the MLS is coming from humans. Those humans being real estate agents or real estate agent admins, or people that might work at the MLS, doing it for the real estate agents.
Sometimes that data gets entered incorrectly.
For example with this property that Katherine and I were looking at, it was a two-bedroom condo but the way that the data was coming out to the property websites, it listed as only having one parking space.
If you're looking to live there as an owner-occupant, or even looking at it as s a real estate investment, like we are, having a two-bedroom condo with only one parking space isn't ideal.
However, Katherine went digging into the information a little bit deeper and found out that it did in fact have two parking spots, even though a lot of the places that it's being marketed online showed it as only having one.
That's an example of bad data.
Many potential home buyers just glossed right over this listing. They skipped it. They probably saw it online, looked at it, thought it looked kind of nice, but then noticed it only has one parking spot and go well, "where are we supposed to park our cars at?"
So they move on to the next property.
Katherine and I dug a little bit deeper and found out it checks off even more boxes. And that's why we went to look at it.
IN MY OPINION
Bad data is never intentional. It's never malicious. The listing agent or the admin doesn't intentionally mean to enter the wrong data. It could have just been some wrong information passed from one place to the next.
It's kind of like the telephone game. The information starts from here, it gets passed to here, it gets passed to here, supposed to be put on this form, and then supposed to be entered into the MLS. And somewhere along the lines of the data might've got miscommunicated or someone just might've hit the wrong key.
Mistakes happen, but when those bad mistakes happen, there's an opportunity to find good real estate deals that others have skipped over.
2) Bad Photos
Look for bad photos if you want a good real estate deal.
The difference between bad data and bad photos; Bad data could be an honest mistake. Bad photos is being lazy or being cheap.
There have been so many times when we were working with buyers, out looking at properties because they saw a good property online based upon the pictures. Then when they get to it in person, they're extremely disappointed because it looks way better online than it actually does in person.
This actually happens in the reverse also.
The photos look bad online and then when they get to look at it in person, they're pleasantly surprised.
I don't quite understand why listing agents don't spend a few hundred dollars to hire a professional photographer to get great-looking photos because web appeal is the new curb appeal.
Back when I started selling real estate in 1997. So many buyers would just do a drive-by of the property.
They would check out the neighborhood, look at the curb appeal, how it looks from the street and go, “that looks like that could be someplace that we would be happy to call home”.
Schedule a showing with me and then I showed them the inside.
Now, you're just looking at properties online, right? You're either looking at it on your computer or you're swiping through your phone.
So I don't know why a listing agent wouldn't spend a couple of hundred dollars to get great looking photos, but many don't. This laziness or cheapness could be to your benefit.
Before you skip a listing just because it doesn't look good in pictures, double-check. If the only thing you don't like is the pictures, maybe it's worth a look.
There's still a lot of listings that don't have great photos on them. It doesn't mean it's not a great property. So just because you see bad photos online, doesn't mean it's not going to be a good deal.
3) Bad Condition
I know you have a certain idea of what your home should look like. If you're spending $500,000, $700,000, or even $1,000.000 you expect it to look a certain way. HGTV shows like House Hunters, Property Brothers, etc, have not helped with reasonable expectations for home buyers.
You're seeing buyers that absolutely need to have granite or quartz countertops. You have to have hardwood floors, and the home has to look impeccable.
Here are some thoughts from real estate agent and YouTuber Graham Stephan on why finding a property that needs a little bit of rehab might be the way to go.
"Renovate. And this is the best way to add equity to a property is by spending money, fixing it up, and then you will profit. The difference between what you're in it and what the home is worth after you're done renovating it.
And from my perspective, this is usually the easiest and best way to increase the value of a property and most places that need renovation priced themselves accordingly. And by doing the work yourself, you're able to often do it much cheaper than if you're able to pay for someone's already completed work. And by doing that, you make the difference between what you're in it. And again, what the property is worth when you're done. Now with this comes the really fun part, and that is putting your own style and touches and finishes in the property. Now, even though I recommend going pretty neutral, especially if you're going to be doing something to rent out or for somebody else, you can still put your own touches and personality on this and still have just so much fun renovating a property and just kind of making it your own."
Other thoughts from a real estate agent with a YouTube channel called Meet Kevin, and he calls this process, Buying in the Wedge.
"So let me first clarify why I recommend you get something that needs cosmetic work. If you get something that needs cosmetic work, you're buying in the wedge of a market.
Here's what I mean. If a property is worth $500,000 as a total fixer-upper and it's worth $625,000, fixed up, a flipper might be able to pay $475,000 for it, because remember they also have to budget in selling costs and holding costs. Which somebody who's going to live in the property at least to start with and then maybe rent it out in the future. It doesn't have to be considered. On the other hand, most buyers aren't willing to get into cosmetic remodels. So that's where you have a little bit of a wedge. The flippers are on the low end and they cannot afford to pay what somebody can pay that's going to keep the property, live in it for a little bit, remodel it and maybe rent it out in the future.
So, yeah, flippers over here on one end. And then you got the move in ready buyers who were buying the place for $625,000. And then, and you ideally have you."
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Buying In The Wedge
I really liked that idea, that phrasing, that terminology of Buying in the Wedge of where the contractors is at, and what the fair market value most likely is.
There are some good deals to be had inside that wedge of where the condition is not great but you can find a great deal.
We had this happen while representing the seller. A wholesaler, a home flipper was trying to get a deal at a certain price on a property.
We knew that the fair market value after it was fixed up would be close to $450,000 to $500,000. The wholesaler and the home flipper we're looking to buy the home for $215,000. That would give them a lot of room in order to update the home, get it to a certain standard of what the market was looking for and make a very healthy profit. But we knew in representing the seller that we could also put it in the market at a much higher price. Of course not the $450,000 to $500,000. But get the seller a lot more money, put more money into their pocket than what that home flipper was willing to pay.
So when we put it into the market, a first-time home buyer was able to get a great deal on it and didn't actually have to update it immediately to move in. It was in livable condition. It just hadn't been updated in a very long time. And now this home buyer had a great real estate deal, they had a roof over their head and they were going to be able to:
- remodel this home based upon their timeline,
- on their budget
- and to what their preferences were of what they wanted that home to look like.
I would certainly say that that home buyer bought in the wedge.
So how do you find these good real estate deals that have the bad data, the bad pictures and the bad condition?
Well, you could obviously watch the real estate market every day like a hawk.
If you're signed up on our website persingergroup.com, you're going to get an email every single morning with an update of what's new in the market, the new listings, what went pending, what closed and what price that closed for. The website also updates every 15 minutes. So you could come back and check throughout the day, basically to see what listings are coming on the market in real-time.
The other way that I'd recommend to find these good deals is by using what we call the CIRCLE BACK TECHNIQUE.
The Circle Back Technique
A lot of websites, ours included, are going to be talking about how fast they update like persingergroup.com updates new listings every 15 minutes. And so there's a lot of push in the industry of like new, most current homes for sale. But the Circle Back Technique is about going back and looking at homes that are still for sale, not the homes that were listed this week, but homes that were listed maybe last week or three weeks ago, four weeks ago.
What persingergroup.com allows you to do that pretty easily. If you hit the saved as a favorite, the little heart icon when you're searching for homes, it's going to compile all of your favorites.
Because there's some hidden gems in there.
So even though it's an extremely hot seller's market. It doesn't mean that you can't find a good real estate deal.
Are you going to be able to find the perfect home? Probably not. But you can find a good real estate deal if you're looking for the bad.
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