When you are looking to make offers, remember your obligation is to the most important person in your company; the shareholder. Most often, the shareholder is you. Have your list of what a profitable deal looks like, armed with your REIA Comps information and some courage your list can be successful.
The key to meeting your goals and having your success as an investor is a thorough understanding of VALUE. Understanding the value of a potential investment property is the basis for profits. Taking stock in the real estate market and learning how to properly analyze the market is paramount. This enables you to make a maximum profit when buying real estate for flipping or reno and sale.
Poor property valuation can take someone from current investor to a sideline spectator very easily. So why do people make these huge valuation mistakes? There are several reasons. Some people will take the word of a realtor or broker as fact and make their decision based on their recommendation. However, this is too subjective and can lead to lost income. Some people are lazy in their research. But the most common reason why new investors over estimate a properties' value is they fall in love with how much the property may be worth after it is fixed up. You must pick up the property for what it is currently worth. REIA Comps can help you offer the right price based on the comps for the area.
In this case, let’s say the owner realizes the neighborhood is highly valued and speculates it will continue to appreciate, and feels they deserve a portion of the equity. The fact is they don’t. They should not receive any more for the property than what it is worth in its current state. If the seller wants a part of the equity, then they will need to invest in fixing up the property. Be firm. This is why only 1-2% of the offers you make will turn into transactions. Taking the time to do your proper due diligence will ultimately save you in the long run.
The bottom line is this: In most circumstances, pay for the property what it is worth in the current condition. Always use REIA Comps to determine the best acquisition and ARV for every foreclosure deal you look at. Don’t for one moment let someone tell you the value of a deal. Let REIA Comps show you for yourself.