A Good Deal is Hard to Find

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Real estate is such a quirky industry.  I work with a lot of investors, and most everyone that invests in real estate is looking for the same thing: a good deal.  Actually, even “owner-occupant” buyers now are looking for a good deal.  (Didn’t people used to look for a nice place to live that they could afford, rather than a good deal?)

Anyway, it seems to me, that even in this so-called buyer’s market – a good deal is hard to find.  Even properties in terrible condition are priced so that after someone buys the house and puts in all their “sweat equity” to fix it up, they may have spent more than the property is worth. And rental properties, forget it.  The majority of properties are not priced to “cash flow.”

What is going on?  Honestly, I think that sellers are just not ready to part with their historic equity.  At one point, their property had a certain value, and they just don’t want to give it up.  So the property sits and waits for someone who never comes, to come along and pay what it was once worth.

While some investors have decided to stay on the sidelines for a while and see how things shake out, many investors are ready to buy in this market; if only they could find a good deal.

Well, I know a lot of people have written a lot of books and done a lot of training camps on how to find a good deal, but let me just simplify it.  The way I see it there are two ways to help my clients find a good deal.  The first way is research.  Look at as many properties (online) as possible, analyze them, check the comps, check the condition, and hand-pick ones that are priced anywhere near a good deal.  As you can imagine, this is a slow, tedious, and random process, because there are far more properties on the market than any one person could hope to evaluate.  BUT – I have found good deals this way…

The second way I have found is to reach out to as many of my colleagues as possible and say “tell me when you have a good deal because I might be able to help you sell it.”  Not all of my colleagues think this is a good idea, but many will cooperate with me this way.

So the other day I was talking to a fellow Realtor, and I said “do you have any good deals listed” and he said, “yes.”  Cool!  So I look up the property he tells me and it actually did look like a pretty good deal.  This owner has been trying to sell the property for over 600 days!  The price has dropped almost $150k from asking down to the mid-$200k’s.  So I call up a client that I know would be interested in that area and price range and I say, “check out this deal!”  He checks it out, he thinks about, and finally he gets back to me and says, “you know that does look like a good deal.”  Let’s go take a look.  And what do you know, it’s sold! 

And that is why I say real estate is a quirky industry.  All these properties just sitting pretty on the market, but if you’re not careful, someone can still come along and snatch up your house before you.