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The Home Buying Process
So, you would like a piece of the real estate pie and don’t know where to start.
Sounds simple enough doesn’t it? First, go out, find a home, then the bank to get financing to buy the home. After that, you can spend a little time fixing up. Finally, sell the home and smile all the way to the bank. It isn’t quite that simple. However, if you do the complete research on the home in advance you can take a much bigger slice of the real estate pie, then if no precautionary research was done.
Let’s break down the process of buying a home, fixing up a home and then selling a home and making the most out of your investment.
You will need to take the time do the research in the neighborhood that the potential fixer upper is located. A real estate agent can help you with this process. The values around the potential home you want to buy will affect the home value dramatically.
Beginning the search for home values can be a start. Checking the home values online usually with your local county’s website will give you a base to start. Seek the help of a realtor. They have many resources to help you in finding all of this information. They may even suggest a trusted home appraiser to give an estimate of what the home is valued at and what potentially tell you what estimated resale value of the home would be once it was fixed.
If the home values are considerably higher than the purchase price of the home it will have a higher resale value when you sell it. On the other hand if those values of other homes in the area are very low in comparison to the purchase price of the home, you may want to keep searching investment homes.
Figure out exactly what the house is going to need to make the resale value worth your efforts. Do not do these figures in your head. Write down exactly what the house must have done to it to be livable or bring it up to date. Always take your out of pocket figures and round them up. It is better to over figure and make more profit on a home than to under figure and lose money.
When fixing the home try to fix all of the things that you can do on your own to save money. If you know friends, family, or a trusted contractor that will give you the best deal on fixing up the investment home, it will save you money on fixing the home before resale.
Starting with the outside and working your way in is a good way to start fixing up the home. The first impression to a buyer isn’t what color the walls are inside but the over all look of the house outside the home. A real estate agent may refer to this as curb appeal.
When potential buyers roll into the driveway, they are already forming an opinion in their mind as to whether they like the look of the place or not. Start simple on fixing up the outside by mowing, pulling weeds, general clean up of the yard and trimming a few trees can really add a lot to the home’s first impression on potential buyers.
Painting and laying carpet are the first things inside the home that will put a new face on your fixer upper home. These are things that most people can get done by a third party or do themselves without a lot of investment.
Stick to your budget while you are fixing up this investment home. Keep in mind that the home isn’t for you to live in but to fix it up so a potential buyer will want to call it home.
Finally, you found a great investment home and made a great deal on it. You took the time to fix the home up with a lot of elbow grease and some help from your favorite contractor. Now it is time to find out if the icing is as sweet as the cake.
Roadblock: What Do You Ask for the Home?
Go back to the figures that you wrote down before you bought the home. The home’s original value should then be added to your fixing costs (including labor). While these figures are dancing around on your paper you want to take into account the other home values in the area to come up with the final resale value of the home. The surrounding home values can sometimes be one of your biggest factors.
Finding a trusted real estate agent to help you decide a fair asking price and to sell the home more quickly is a wise investment at this point.
Take the time to look for a great deal on a fixer upper or investment home. It doesn’t matter whether you find a home foreclosure or sellers looking to make a quick sale, you can make the best of their situation and both parties benefit.
Get the most out of your investment home or fixer upper by doing the research with a trusted real estate agent before you buy the home. Put some elbow grease into the fixing as much that you can on your own first before you pay someone to do it. Ask a fair price for the home considering the neighborhood and fair market value of the home. Finally, let your real estate agent use their resources to help you get the home sold more quickly so that you may get your investment back in your pocket.
Call us, 509.438.9344, Email us, or fill out the contact form below.
We respond right away! -Colleen & Joe Lane, Realtors®
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