People have often asked me how we buy a house that's undervalued. It's important because most people make their money in the buy, not in what they do to the house afterward. That's certainly been true for us. You have to know the market intimately enough to recognize a bargain when you see it. So what am I doing to find the next house?
1. Checking the computer listings obsessively, as in five times a day. If something good is listed, chances are it will be snapped up the first day. Did you know even Craig's List has real estate ads?
2. Combing through old listings. Two of our buys sat on the market for months and months because they showed so poorly. (To us, a plus!) Look long and hard at these uglies. We were able to make a low offer to the sellers, who were ready to move on with life.
3. Driving through the neighborhoods we like, noting "for sale by owner" signs. Keep a blank contract in the car so you could stop immediately and talk to the owners if you find a treasure. We missed a Green Hills cottage for $150,000 when a man driving by did just that.
4. Checking the week's HUD foreclosure list. We bought our second home this way. Even though it was a dump, we had looked at enough houses to know anything in West Nashville for under $65,000 was good.
5. Putting out the word to friends and family. It helps to have all the eyes you can watching and listening on your behalf! We'll be going to an absolute auction that friend and reader Ann spotted for us.
And on the estate sale house, my agent asked the partners in her firm for advice. They suggested we try to meet with the original owner face-to-face and see if we could pay her for the first option to buy the house, should the appraisal fall within our price range. We could not reach her by phone yesterday. Instead, I wrote a very personal letter explaining how much we loved her home and asking her to consider our family first as she readies the home for sale. This approach tips our hand when it comes to bargaining, but if we are able to buy the house for what we think it will appraise for, it will be a great investment.