1. Consider buying a bank-foreclosed property.
When someone fails to pay a mortgage payment for an extended period of time, the lender will ultimately repossess the home and remove the occupants. Once the home is empty, the lender generally lists the house for sale on the market, using a local real estate to list it.
While the foreclosure, in itself, is of course sad (no one rejoices when someone loses a home), once the deed has been done, these properties can be some of the best deals you’ll find in real estate. Banks want to be in the business of lending money, not managing property, so they are often quick to offer large discounts just to get the deal off their books.
2. Be the first . . . or the last.
In real estate, often the old adage holds true: The early bird gets the worm.
Oftentimes, it’s not the highest offer for a property that gets accepted, it’s simply the first. Therefore, if you are looking for a great deal, be quick about it! Get a pre-approval from a bank so you can jump at any property right away, and have your real estate agent set you up with automatic email alerts notifying you of any new property that hits the market.
Then, don’t delay -- check it out quickly, and make an offer the same day if possible.
Conversely, another way to find great deals is to look for properties that have been on the market for a long time. Those owners are often far more willing to sell for a discount, because they are tired of holding on to that property. Many times, they will have been making two mortgage payments for months (or years) and will entertain almost any offer.
3. Approach absentee owners privately.
In a hot real estate market, like the one most of the United States is experiencing today, great deals can be hard to find because of the large number of people looking for a home. In some areas, a single house for sale might get a dozen or more offers in the first several days.
Therefore, one of the best tactics real estate investors use today is to look outside your multiple listing service and instead contact owners directly, asking them to consider selling. At any given time, a good percentage of the population will entertain that option, so why not reach out before they list the home with a real estate agent? The best real estate agents (yours truly) will do this on your behalf.
4. Look at a lot of deals.
Finally, understand that finding good deals is largely a “numbers game.” You often have to kiss a lot of frogs to find the prince!
Look at deals in terms of a funnel. At its top, numerous leads come in, but at the bottom, only a few come out. Therefore, if you want more deals at the bottom, you need to improve each aspect of your funnel, including the quality and number of leads at the top. For example, your funnel might look like the following:
Raw leads from real estate agent -- 200
The location is somewhere you'd would buy -- 100
A quick analysis shows promise -- 20
A deeper analysis still shows promise - 10
Deals you've made an offer on -- 8
Offers you've made that have been accepted - 1
Notice that, in the above funnel, your agent sent you 200 possible properties, but at the end, you ended up making offers on only eight and only one offer was accepted. If you wanted to buy two properties, you know you'd need to look back on your funnel and find a way to increase your numbers. Because, again, it’s just a numbers game.
Whether you are looking to buy an investment property, purchase a home for yourself or buy real estate for another reason, remember: You make your money when you buy. If you want to have immediate equity in your property, which can help you build wealth in the future, or save you in case of an economic turndown, you must find great real estate deals using a great real estate agent.