Buy Properties Below Market Value

One of the most important aspects of the short sale business is determining the value of the property you have under contract. It’s impossible to formulate your offer to the short sale lender without knowing the home appraisal value of the property you are interested in. Likewise, knowing the appraisal value of the property is just as important to the loss mitigator at the bank. The loss mitigator must establish an appraised value for the short sale property so he has a baseline price for negotiation. The appraised value of the property establishes the playing field on which we negotiate the short sale price of the property. Getting Property Comparisons The best way to determine the home appraisal value of a property is by using property comparisons (comps). Look at the properties in the same area of the short sale property. You can get these comps with a little effort. There are a few ways to find market value comparisons for your area: • Subscription programs (one is Haines, a subscription service on disc) • Multiple Listing Service (MLS) if you have access • Network with a realtor who can pull comps for you • Free comps services on the Internet It’s not recommended that you use the free market comparison services found on the Internet. These free services are worth about as much as you pay for them. If you have to spend some money getting comps, that’s a good thing. It means that someone is actually doing research behind the website or program. Finding Home Appraisal Value: An Example A busy real estate investor may outsource their home appraisal needs to another company or a certified FHA appraiser. When a deal comes in the real estate investor will email the FHA appraiser, the address and owner’s name. In about 24 to 48 hours the appraiser will send back a limited desktop appraisal with three comparison prices on other similar sold properties and the market value that the appraiser has determined for the property that the company is interested in. The appraisal may also include some additional information and a map. This appraisal gives an idea of the market value of the property in comparison with other distressed properties in the area. When looking for comps, don’t look for sales of well maintained properties, instead look for comparisons of other properties in foreclosure, REO properties, or corporate-owned properties. Be Prepared to Pay for it! Companies spend money getting their comps because they want good, accurate market value comparisons. When you are figuring the budget for your short sale business, remember to allocate some funds to pay a company or a certified FHA appraiser for that home appraisal. It’s well worth it to pay for a home appraisal so that you have accurate comps from third person parties or neutral parties outside of your short sale deal. You present their appraisals as objective evidence to convince the bank to accept your short sale offer. Factoring in Cost Estimates for Repairs The physical condition of the property is just as important as comps in a home appraisal. See if there are any repairs to be made on the short sale property. Make notes of what’s wrong, take photos, and get construction estimates for the cost of repairs. When you do your cost estimates remember that the bank will be making the repairs, not you. Get cost estimates from a general contractor the bank would typically hire. The best way to get cost estimates for your home appraisal is to hire a certified home inspector. You can look one up in the yellow pages. There’s also an organization called the National Association of Home Inspectors (NAHI). NAHI has high standards and finding a home inspector affiliated with this organization is a good way of making sure you get a thorough inspection. A typical home inspection can take two and a half to three hours. The inspector gets up on the roof, checks the crawlspace and goes over the home with a fine-toothed comb. On completion of the home inspection the inspector hands over a report that can be 20 pages with detailed information about the property defects. Home inspectors may also takes photos and provide detailed cost estimates. Paying a home inspector to get cost estimates is a great way to calculate the home appraisal value for your property. You’ll know exactly what’s wrong with that house because you’ve gone to a neutral third party expert. Getting the Cost Estimates: An Example Dan Shields is a typical home inspector. He’s a member of NAHI and does all of the home appraisal evaluations and repair estimates for many investors. Dan states that a home inspector will start an inspection from the outside of the property to get a look at the big picture. He’ll check the roofing, gutters, siding, and windows to make sure they’re properly installed and flashed. He will also check out porches, columns, etc. From there the home inspector enters the home for the interior survey, to document built-in amenities, appliances, and flooring. He will next go to the mechanical room and check the heating/cooling package and plumbing. Finally, the home inspector will check the attic and find the insulation factor for the short sale property, literally working from the ground up on the home inspection.A Broker’s Price Opinion ValueWhen you complete your home appraisal and submit the short sale package to the bank you will be assigned to a specific loss mitigator who will want to determine their own estimate of property value. The loss mitigator orders the bank’s appraiser to go look at the property and get a broker’s price opinion (BPO) or market value. Sometimes it’s done by a realtor, sometimes an appraiser. It’s your job to be the contact person that the appraiser goes through to get into that property. It’s very important that you meet the appraiser at the property to convince him your home appraisal value is about the same as the BPO value. When you meet with the bank’s property appraiser let him know the property is in foreclosure and that you’ve been working with the seller to try to do a short sale with the bank. Get that point across immediately. You don’t want the meeting with the bank’s appraiser to be a confrontation. This is first impression time, so just be yourself and let your personality shine. Shake hands with the property appraiser. Get to know him for the five minutes before you start shoving your material on him. The whole BPO process will probably take less than 15 minutes. You have 15 minutes to let your personality shine so make it your best effort. During the BPO When you go out to these appraisals, take three things; a copy of the Real Estate Purchase Contract with your offer amount, your market value comparisons and a copy of your home inspector’s report Try to present the material in a conversational tone. Ask if he’d like a copy of the offer you have made on the property and so on. If it’s an appraiser, he will always want a copy. Realtors are a different story—you can never tell what they’re going to take. Just ask and see what he’ll take from you. An appraiser will always take the property inspection report because it’s a good, neutral indication of property damage. Let the appraiser know that your Purchase Contract has been at least preliminarily accepted by the bank and that’s why he is appraising the market value. You’d be surprised how often the bank’s appraiser doesn’t even realize the property is in foreclosure. You also want to share comps with the home appraiser. Most of the time, appraisers have pulled comps before they go out to the property, so you may be able to share comps to get an idea of the BPO. Make sure the appraiser knows about specific problems with the property such as; mold, termites, or foundational problems that are not readily apparent. This is something the appraiser won’t spot during his 15 minutes with the property. Once you get these three documents into the hands of the bank’s home appraiser chances are higher that the bank’s BPO comes in close to your home appraisal value. When you get a good home appraisal value and cost estimates on that short sale property. You’ll have armed yourself with the best tools in convincing the bank to accept your low short sale offer. Pick up more information about real estate shortsaling at Real Estate Investor.com. This is the place to go for the latest real estate news and advice. You’ll find a network of other real estate investors ready to help you out, along with free articles, blogs, contracts and documents for your use

One of the most important aspects of the short sale business is determining the value of the property you have under contract. It’s impossible to formulate your offer to the short sale lender without knowing the home appraisal value of the property you are interested in. Likewise, knowing the appraisal value of the property is just as important to the loss mitigator at the bank. The loss mitigator must establish an appraised value for the short sale property so he has a baseline price for negotiation. The appraised value of the property establishes the playing field on which we negotiate the short sale price of the property.Getting Property Comparisons The best way to determine the home appraisal value of a property is by using property comparisons (comps). Look at the properties in the same area of the short sale property. You can get these comps with a little effort. There are a few ways to find market value comparisons for your area: • Subscription programs (one is Haines, a subscription service on disc) • Multiple Listing Service (MLS) if you have access • Network with a realtor who can pull comps for you • Free comps services on the Internet It’s not recommended that you use the free market comparison services found on the Internet. These free services are worth about as much as you pay for them. If you have to spend some money getting comps, that’s a good thing. It means that someone is actually doing research behind the website or program. Finding Home Appraisal Value: An ExampleA busy real estate investor may outsource their home appraisal needs to another company or a certified FHA appraiser. When a deal comes in the real estate investor will email the FHA appraiser, the address and owner’s name. In about 24 to 48 hours the appraiser will send back a limited desktop appraisal with three comparison prices on other similar sold properties and the market value that the appraiser has determined for the property that the company is interested in. The appraisal may also include some additional information and a map. This appraisal gives an idea of the market value of the property in comparison with other distressed properties in the area. When looking for comps, don’t look for sales of well maintained properties, instead look for comparisons of other properties in foreclosure, REO properties, or corporate-owned properties. Be Prepared to Pay for it! Companies spend money getting their comps because they want good, accurate market value comparisons. When you are figuring the budget for your short sale business, remember to allocate some funds to pay a company or a certified FHA appraiser for that home appraisal. It’s well worth it to pay for a home appraisal so that you have accurate comps from third person parties or neutral parties outside of your short sale deal. You present their appraisals as objective evidence to convince the bank to accept your short sale offer.Factoring in Cost Estimates for Repairs The physical condition of the property is just as important as comps in a home appraisal. See if there are any repairs to be made on the short sale property. Make notes of what’s wrong, take photos, and get construction estimates for the cost of repairs. When you do your cost estimates remember that the bank will be making the repairs, not you. Get cost estimates from a general contractor the bank would typically hire. The best way to get cost estimates for your home appraisal is to hire a certified home inspector. You can look one up in the yellow pages. There’s also an organization called the National Association of Home Inspectors (NAHI). NAHI has high standards and finding a home inspector affiliated with this organization is a good way of making sure you get a thorough inspection.A typical home inspection can take two and a half to three hours. The inspector gets up on the roof, checks the crawlspace and goes over the home with a fine-toothed comb. On completion of the home inspection the inspector hands over a report that can be 20 pages with detailed information about the property defects. Home inspectors may also takes photos and provide detailed cost estimates. Paying a home inspector to get cost estimates is a great way to calculate the home appraisal value for your property. You’ll know exactly what’s wrong with that house because you’ve gone to a neutral third party expert. Getting the Cost Estimates: An Example Dan Shields is a typical home inspector. He’s a member of NAHI and does all of the home appraisal evaluations and repair estimates for many investors.Dan states that a home inspector will start an inspection from the outside of the property to get a look at the big picture. He’ll check the roofing, gutters, siding, and windows to make sure they’re properly installed and flashed. He will also check out porches, columns, etc.From there the home inspector enters the home for the interior survey, to document built-in amenities, appliances, and flooring. He will next go to the mechanical room and check the heating/cooling package and plumbing. Finally, the home inspector will check the attic and find the insulation factor for the short sale property, literally working from the ground up on the home inspection. A Broker’s Price Opinion ValueWhen you complete your home appraisal and submit the short sale package to the bank you will be assigned to a specific loss mitigator who will want to determine their own estimate of property value. The loss mitigator orders the bank’s appraiser to go look at the property and get a broker’s price opinion (BPO) or market value. Sometimes it’s done by a realtor, sometimes an appraiser. It’s your job to be the contact person that the appraiser goes through to get into that property. It’s very important that you meet the appraiser at the property to convince him your home appraisal value is about the same as the BPO value. When you meet with the bank’s property appraiser let him know the property is in foreclosure and that you’ve been working with the seller to try to do a short sale with the bank. Get that point across immediately. You don’t want the meeting with the bank’s appraiser to be a confrontation. This is first impression time, so just be yourself and let your personality shine. Shake hands with the property appraiser. Get to know him for the five minutes before you start shoving your material on him. The whole BPO process will probably take less than 15 minutes. You have 15 minutes to let your personality shine so make it your best effort. During the BPO When you go out to these appraisals, take three things; a copy of the Real Estate Purchase Contract with your offer amount, your market value comparisons and a copy of your home inspector’s report Try to present the material in a conversational tone. Ask if he’d like a copy of the offer you have made on the property and so on. If it’s an appraiser, he will always want a copy. Realtors are a different story—you can never tell what they’re going to take. Just ask and see what he’ll take from you. An appraiser will always take the property inspection report because it’s a good, neutral indication of property damage. Let the appraiser know that your Purchase Contract has been at least preliminarily accepted by the bank and that’s why he is appraising the market value. You’d be surprised how often the bank’s appraiser doesn’t even realize the property is in foreclosure. You also want to share comps with the home appraiser. Most of the time, appraisers have pulled comps before they go out to the property, so you may be able to share comps to get an idea of the BPO. Make sure the appraiser knows about specific problems with the property such as; mold, termites, or foundational problems that are not readily apparent. This is something the appraiser won’t spot during his 15 minutes with the property. Once you get these three documents into the hands of the bank’s home appraiser chances are higher that the bank’s BPO comes in close to your home appraisal value. When you get a good home appraisal value and cost estimates on that short sale property. You’ll have armed yourself with the best tools in convincing the bank to accept your low short sale offer. Pick up more information about real estate shortsaling at Real Estate Investor.com. This is the place to go for the latest real estate news and advice. You’ll find a network of other real estate investors ready to help you out, along with free articles, blogs, contracts and documents for your use.

One of the most important aspects of the short sale business is determining the value of the property you have under contract. It’s impossible to formulate your offer to the short sale lender without knowing the home appraisal value of the property you are interested in. Likewise, knowing the appraisal value of the property is just as important to the loss mitigator at the bank. The loss mitigator must establish an appraised value for the short sale property so he has a baseline price for negotiation. The appraised value of the property establishes the playing field on which we negotiate the short sale price of the property.Getting Property Comparisons The best way to determine the home appraisal value of a property is by using property comparisons (comps). Look at the properties in the same area of the short sale property. You can get these comps with a little effort. There are a few ways to find market value comparisons for your area: • Subscription programs (one is Haines, a subscription service on disc) • Multiple Listing Service (MLS) if you have access • Network with a realtor who can pull comps for you • Free comps services on the Internet It’s not recommended that you use the free market comparison services found on the Internet. These free services are worth about as much as you pay for them. If you have to spend some money getting comps, that’s a good thing. It means that someone is actually doing research behind the website or program. Finding Home Appraisal Value: An ExampleA busy real estate investor may outsource their home appraisal needs to another company or a certified FHA appraiser. When a deal comes in the real estate investor will email the FHA appraiser, the address and owner’s name. In about 24 to 48 hours the appraiser will send back a limited desktop appraisal with three comparison prices on other similar sold properties and the market value that the appraiser has determined for the property that the company is interested in. The appraisal may also include some additional information and a map. This appraisal gives an idea of the market value of the property in comparison with other distressed properties in the area. When looking for comps, don’t look for sales of well maintained properties, instead look for comparisons of other properties in foreclosure, REO properties, or corporate-owned properties. Be Prepared to Pay for it! Companies spend money getting their comps because they want good, accurate market value comparisons. When you are figuring the budget for your short sale business, remember to allocate some funds to pay a company or a certified FHA appraiser for that home appraisal. It’s well worth it to pay for a home appraisal so that you have accurate comps from third person parties or neutral parties outside of your short sale deal. You present their appraisals as objective evidence to convince the bank to accept your short sale offer.Factoring in Cost Estimates for Repairs The physical condition of the property is just as important as comps in a home appraisal. See if there are any repairs to be made on the short sale property. Make notes of what’s wrong, take photos, and get construction estimates for the cost of repairs. When you do your cost estimates remember that the bank will be making the repairs, not you. Get cost estimates from a general contractor the bank would typically hire. The best way to get cost estimates for your home appraisal is to hire a certified home inspector. You can look one up in the yellow pages. There’s also an organization called the National Association of Home Inspectors (NAHI). NAHI has high standards and finding a home inspector affiliated with this organization is a good way of making sure you get a thorough inspection.A typical home inspection can take two and a half to three hours. The inspector gets up on the roof, checks the crawlspace and goes over the home with a fine-toothed comb. On completion of the home inspection the inspector hands over a report that can be 20 pages with detailed information about the property defects. Home inspectors may also takes photos and provide detailed cost estimates. Paying a home inspector to get cost estimates is a great way to calculate the home appraisal value for your property. You’ll know exactly what’s wrong with that house because you’ve gone to a neutral third party expert. Getting the Cost Estimates: An Example Dan Shields is a typical home inspector. He’s a member of NAHI and does all of the home appraisal evaluations and repair estimates for many investors.Dan states that a home inspector will start an inspection from the outside of the property to get a look at the big picture. He’ll check the roofing, gutters, siding, and windows to make sure they’re properly installed and flashed. He will also check out porches, columns, etc.From there the home inspector enters the home for the interior survey, to document built-in amenities, appliances, and flooring. He will next go to the mechanical room and check the heating/cooling package and plumbing. Finally, the home inspector will check the attic and find the insulation factor for the short sale property, literally working from the ground up on the home inspection. A Broker’s Price Opinion ValueWhen you complete your home appraisal and submit the short sale package to the bank you will be assigned to a specific loss mitigator who will want to determine their own estimate of property value. The loss mitigator orders the bank’s appraiser to go look at the property and get a broker’s price opinion (BPO) or market value. Sometimes it’s done by a realtor, sometimes an appraiser. It’s your job to be the contact person that the appraiser goes through to get into that property. It’s very important that you meet the appraiser at the property to convince him your home appraisal value is about the same as the BPO value. When you meet with the bank’s property appraiser let him know the property is in foreclosure and that you’ve been working with the seller to try to do a short sale with the bank. Get that point across immediately. You don’t want the meeting with the bank’s appraiser to be a confrontation. This is first impression time, so just be yourself and let your personality shine. Shake hands with the property appraiser. Get to know him for the five minutes before you start shoving your material on him. The whole BPO process will probably take less than 15 minutes. You have 15 minutes to let your personality shine so make it your best effort. During the BPO When you go out to these appraisals, take three things; a copy of the Real Estate Purchase Contract with your offer amount, your market value comparisons and a copy of your home inspector’s report Try to present the material in a conversational tone. Ask if he’d like a copy of the offer you have made on the property and so on. If it’s an appraiser, he will always want a copy. Realtors are a different story—you can never tell what they’re going to take. Just ask and see what he’ll take from you. An appraiser will always take the property inspection report because it’s a good, neutral indication of property damage. Let the appraiser know that your Purchase Contract has been at least preliminarily accepted by the bank and that’s why he is appraising the market value. You’d be surprised how often the bank’s appraiser doesn’t even realize the property is in foreclosure. You also want to share comps with the home appraiser. Most of the time, appraisers have pulled comps before they go out to the property, so you may be able to share comps to get an idea of the BPO. Make sure the appraiser knows about specific problems with the property such as; mold, termites, or foundational problems that are not readily apparent. This is something the appraiser won’t spot during his 15 minutes with the property. Once you get these three documents into the hands of the bank’s home appraiser chances are higher that the bank’s BPO comes in close to your home appraisal value. When you get a good home appraisal value and cost estimates on that short sale property. You’ll have armed yourself with the best tools in convincing the bank to accept your low short sale offer. Pick up more information about real estate shortsaling at Real Estate Investor.com. This is the place to go for the latest real estate news and advice. You’ll find a network of other real estate investors ready to help you out, along with free articles, blogs, contracts and documents for your use.

The volume of people logging onto Homes Overseas, to search the property listings, for example, has jumped up by close to 60 per cent over the past couple of months.

With overseas property prices having suffered huge falls around the globe, due to the economic crisis, now is increasingly seen as a potentially great time to negotiate a once in a lifetime overseas property bargain. But this can sometimes be easier said then done.

Local property knowledgeNegotiating techniques can often vary from country to country, and that “which may seem cheap abroad, compared to UK property values, may not be inexpensive, in contrast with local property prices”, says Kate Faulkner of Designs on Property.

This is why it is important to have good local market knowledge, or access to someone who does, in order to secure the best possible deal. Colin Murphy, director, Tuscana property agency, says: “It is vital to have somebody that you can trust on the ground, with knowledge of the local property market in which you are trying to buy into, as they will have an understanding of what true local property market value is.”

Local property market valueBut how do we determine what is genuine market value? James Oliver of Find and Build, a property search agency and building firm, comments: “Prospective buyers should always look at comparable property prices within the given area that they are looking to buy, as this will give them a greater idea of local market value, and place them in a stronger negotiating position.”

Comparable sale prices should be as up to date as possible, and it may be necessary to factor in recent price falls, as well as potential future capital depreciation. For example, property firm, Iberian International, are currently offering homes for sale in Spain with the option of paying an initial deposit now and the rest of the balance in two years time. This would effectively tie a buyer into purchasing a residential unit at today’s sale price. However, recent data from BBVA, Spain’s second largest bank, estimates that average Spanish property values will depreciate by around 20 per cent between now and the end of next year.

If BBVA’s projection is accurate, anyone buying a home in Spain now, could find himself or herself seriously out of pocket, and potentially in negative equity, by the start of 2011. “Always factor in future property price growth or losses, and not just today’s market value,” says Faulkner.

The art of negotiation“Assess your strengths before entering into negotiations and take advantage if you’re in a position of power,” says Julian Constance, director, Tailored Home. He says that those people who are in no rush to buy, are not in a property chain, have finance, ideally cash, in place, will “always be in a position of strength.”

Constance adds: “Consider the current economic climate, the availability of similar properties in the area and any offers other agents or developers may be running. With so many empty homes – both old and new – on the market, it’s worth negotiating as hard as you can with the seller.”

Those people prepared to buy properties overseas in bulk will also be looked upon favourably, although single unit buyers do remain invaluable to sellers. “Do not be afraid to pitch a low offer”, says Oliver. “An estate agent is unlikely to disclose all the information to the prospective purchaser, and so it is important that the potential buyer finds out as much information as they can about the vendor, and their motivation for selling.

This is why it can be useful to employ a property finder,” Oliver says. “There are some sellers that are in a very stressful position and gagging to sell, due to their poor financial state, and this is where some of the best value for money deals can be secured.”

Make an offerThere are lots of people looking to haggle asking overseas property prices, particularly in the current economic climate. When making an offer on a property, do not be afraid to offer way below the asking price, even if bordering upon the ridiculous, particularly in the current buyers’ market. After all, a property is only actually worth what someone is prepared to pay for it.

Chris Mercer, a property agent in Costa Calida, Spain, with Mercers property agency, offers the following case study: “Six months ago we had a buyer keen to secure a two-bedroom, two-bathroom Rosa style detached villa on the ever-popular Camposol golf development in Mazarron,” Mercer said.

“He [the purchaser] viewed a total of six similar properties priced between €235,000 and €255,000. Not overly picky between the six, he made a flat offer of €150,000 for any of them. As an agent we had a duty to inform each vendor of his offer, however low it seemed, and whilst five vendors said an outright ‘no’, the sixth agreed as was keen on a quick sale. “A saving of €100,000 more than outweighed any embarrassment on the purchaser’s part for going in with what appeared to be a crazy offer. Six months later any of those five vendors yet to achieve a sale are possibly kicking themselves having seen prices fall further.”

Time on the marketIt is a wise idea to try and spot homes that have been on the market for quite some time, “at least a few months”, says Murphy. “This is because vendors are likely to be more willing to negotiate downwards on the price.” Faulkner agrees with Murphy. She says: “Properties overseas can often take years to sell. The longer the home has been on the market, the greater the likelihood, the owner will be willing to sell at a reduced price.”

ExtrasWhen negotiating a property purchase, you may want to try and get a few extras thrown into the deal. Murphy says that is not uncommon for a buyer to request that free furniture packages are thrown into a deal, while other purchasers like to request a contribution towards their purchasing costs, “such as legal fees”. It may even be worth asking an “agent to reduce their commission”, in order to secure a deal.

Location, location, locationLocation is key, says Faulkner. She advises prospective purchasers to buy overseas property that will always be of interest to locals, because tourist rental and second home markets can often fluctuate, and do not offer year-round rental opportunities. Furthermore, there is often a mark-up in the price of homes aimed at foreigners, effectively reduces one’s potential exit strategy, when selling up in the future. “Locals are often priced out of buying homes located in tourist areas, which do not always offer value for money.”

Off-plan propertyBuying off-plan property abroad has traditionally presented an opportunity to secure a residential unit at a discount on the retail price, particularly during the first and seconds phases of the release of a development. This is often because developers typically want, or need, to sell a proportion of their stock even before commencing building work in order to raise funds and boost their cash flow and to satisfy their lenders. However, there is a greater risk element to buying property this way, most notably the fact that there are no guarantees that a project will ever be completed.

Faulkner continues: “People buying off-plan property abroad should ensure that they can afford to kiss goodbye to their money, if the scheme is never ever built, which can sometimes be the case. “This may be because of unscrupulous constructors, or the fact that they may have run out of money, while there is always the possibility that legislation may change, which may affect the planning consent.”

Ghost townAnother concern with buying property off-plan is the possibility that the development will be left standing virtually empty, once it is finished, due to a lack of buyers. In Spain, for example, government data shows that there are over a million new-build homes lying vacant. Murphy comments: “It is not uncommon to find areas in Spain which consist of tens of thousands of empty homes, causing the local community, or lack of it, to collapse. “I would only buy into an off-plan project if at least 60 per cent of the scheme had already been sold.”

Property oversupplyThere are housebuilders with “way too much inventory”, that should be willing to accept “significantly reduced” offers, says Julian Constance of property finding agency Tailored Homes. However, Murphy, who mainly sells distressed residential stock in the USA, and Spain, reports that there are still a lot of developers who remain “stubborn” in that they are refusing to adjust to current market conditions, by pricing their homes accordingly.

Consequently, he advises potential purchasers interested in distressed residential stock, to go straight to those banks that have large inventories of foreclosed homes for sale on their books.

Distressed salesBecause banks are not, or should not be, in the property business, having large property stock is proving a huge burden, and so many of them are keen to liquidate their growing residential supply, by selling at below market value. “But do be cautious of the fact that banks and auctioneers do sometimes offer an extremely low guide-price on a property, in order to generate interest, and encourage multiple bids. This can sometimes push values higher, often above what they are worth.

Exchange ratesExchange rates should always be taken into consideration when buying property overseas. A shift in the value of the UK pound against foreign currencies such as the euro, and US dollar, can have an enormous impact on the price of a home abroad. “It is important to remember that exchange rates can move a large amount in a relatively short period of time, says Michael Steenkamp, director, FC exchange.

“Against the pound we have seen the price of the euro increase by nearly 30 per cent in the last 18 months making a €150,000 property about €45,000 more expensive which demonstrates the effect that exchange rate fluctuations can have on the price of a property overseas.”

However, if at the time of making an offer on a home, you feel that sterling’s value looks favourable, then it may be worth taking out a ‘forward contact’, which fixes the exchange rate for a given period of time. Steenkamp adds: “Forward contracts are widely used by property buyers as transactions often take weeks to conclude, leaving buyers exposed to a volatile currency market. “Fixing the exchange rate in times of uncertainty will protect your property price and budget against exchange rate fluctuations between now and when the funds are required.”

LegalAnyone buying property abroad may wish to seek legal advice from at least two different solicitors – one based in the UK and one in the given country where the property is located, according to Faulkner. “The two solicitors should always come up with the same answers,” Faulkner advises. “Always ensure that legal documents are in English, and appoint a trusted translator, if there is a language barrier.”

Due diligenceWherever you choose to buy property overseas, always ensure that you undertake your own careful planning and due diligence prior to parting with your money. Marc Da-Silva for Homes Overseas.

For more independent expert advice about buying or investing in overseas property, visit Homes Overseas.Homes Overseas. Overseas property experts since 1965.

When you buy a home, it is usually going to be one of the most expensive purchases you ever make. However, with that expense comes a valuable piece of property that can be worth considerably more over time. When buying this home, you may want to purchase one that is considered to be “below market value.” That phrase means the home is priced at much less than what it is truly worth or perhaps should be priced.
A home like this will eventually gain in value with the remodeling and fixing up that you will proceed to do. This may be a better option long term instead of overspending on a brand new house only to find your profits diminishing as the housing market changes.
Having patience is usually the key to finding a below market home that can bring you the profits you seek. Often you need to look at several aspects of the home to determine if it really can be cost effective for you. Normally such homes have not been maintained very well for one reason or another. They may have damage that is primarily cosmetic, although some will even have structural damage that you will have to pay significant amounts to have repaired. That does not mean that they can’t be a great money maker for you, though, even with all the work that is involved. People who are willing to put in the time and effort can find a home that once renovated offers a substantial profit.
You also need to consider the condition of the housing market at the time you are both buying and potentially selling the house. If the market is heading downhill then buying a home that needs work may bring you more problems than what it is worth. You can put as much money as needed to make the home beautiful, but if the selling market is bad then you will not see any immediate profits.
You also need to look at what is involved in doing repairs to a home like this, whether the work is done by you or farmed out to a contractor. That includes what you will spend to fix the home, both inside and out, and how much of the work you are willing to do yourself. If you cannot do any of the work yourself, then you need to make sure that you have capable, skilled, and experienced people who can do the work for you. This means quality work is paramount! After all, making shabby improvements can be just as costly as making no improvements at all.
Lastly, you should take the time to research the neighborhood, as well as the specific home you are buying. Besides the neighboring homes, you will want to see other below market homes that are available to you. Look at the lowest price, but make sure you are not getting in over your head when it comes to the work involved. By hiring a qualified home inspector to inspect any home that you are interested in, this will ensure you are purchasing a home that at least has realistic potential to make you a lot of money.

The simple truth is that the market value of your home is what a buyer is willing to pay. An estimate of your home’s value is a prediction of what most buyers would be willing to pay at a given time. This prediction requires a close look at two factors: recent home sales in your area, and an assessment of the real estate market. Pricing correctly is fundamental to a successful outcome in the sale of your home.

Market Analysis

Recent closed sales in your area offer the most relevant data for predicting the sale price of your home. Later, when your home is appraised for the buyer’s loan, the appraiser will only consider closed sales. List prices of homes on the market are of interest too, because they show the current pricing trend.

If your home is superior or inferior to most homes in the neighborhood, or if there are no nearby sales, then it will be more difficult to anticipate the responses of potential buyers. In this case, a strategy of trial and error may be necessary. This strategy will require a realistic assessment of buyer responses. Sometimes buyer responses are unrelated to the size and condition of the home. For example, in an area where most buyers have grown children, a home with the master upstairs may not sell as high.

Real Estate Market

An important part of pricing is an assessment of the state of the real estate market. The market may favor sellers or buyers, or be in balance. An indicator of the quality of the market is the number of months of standing inventory in your market and price range. Use this formula to estimate months of inventory:

1) Count the number of sales in your market area and price range for the past 12 months. (Example: 60 sales between $300,000 – 500,000)

2) Divide the number of sales by 12, to get the number of sales per month. (Example: 5 sales per month)

3) Count the number of homes on the market now. (Example: 100 homes between $300,000 – 500,000)

4) Divide the number of homes on the market by the number of sales per month (Example: 100 homes selling at a rate of 5 per month = 20 months of supply).

The current inventory divided by the rate of sale shows the number of months it will take to clear the current inventory, and reveals the state of the real estate market.

Seller’s Market

Less than 6 months of unsold inventory is considered a seller’s market. In this market, there is a large number of buyers in proportion to the number of homes for sale. The demand for homes is greater than the supply. Buyers must compete with each other for homes. Sellers often receive multiple offers. Buyers will submit the highest price that the market will support. Prices will trend upward. In a climbing market, it makes sense to price slightly above recent sales.

Buyer’s Market

More than 8 months of inventory is considered a buyer’s market. In a buyer’s market the number of homes for sale is large compared with the number of buyers. This market is created by excessive construction, employment decline or high interest rates. A low number of buyers relative to the inventory results in lower prices. Sellers must compete with each other for available buyers. Prices trend downward. In a falling market, prices should be set at the lower end of the range because time works against you – in six months prices may be lower. This may be difficult to do, especially if the home was purchased at a higher price.

Price Per Square Foot

Dollars per square foot is often used as tool for comparing homes. Keep in mind that you must make a sliding scale adjustment from larger to smaller homes. In other words, the larger the house, the lower the price per square foot for comparable properties. This is because the core square footage of a home has a higher value than the peripheral area. The price per sq. ft. on a 1,000 sf home will be much higher than a 5,000 sf home, for similar quality homes.

Should you price high, and hope for an offer?

Houses should not be priced over the market. This is not the best way to position your home for several reasons:

1) Your home will be shown to the wrong group of buyers. The buyer who steps forward will be an aggressive negotiator – someone who will make a low offer.

2) You will inadvertently help to sell the competition. Your high price will convince buyers that another home is a good value.

3) Your best leverage occurs during the early marketing period. Your days on the market is evident to buyers, and is a subtle but important factor in their decision.

How will you know if the price is correct?

Second looks from buyers is the best affirmation of correct pricing. This indicates that your home appeals to buyers in your price range. There may be a few nibbles before a buyer comes forward who is ready to act. It helps to get feedback from showings. However, keep in mind that buyers and agents are often reluctant to say something negative. Look at the overall result of all showings for confirmation of the price . If you are getting lukewarm responses, this will require a strategy of price reductions.

How long should you market a home at a given price?

There is no standard time frame for marketing at a given price. About 8-10 showings is a reasonable number to get a sense of the market response. This usually corresponds to about 2 – 6 weeks for an average home in a balanced market. About 30 days marketing time is a reasonable price test. However, this may be too short for an unusual or very high end home, for which there is a small market. Or, 30 days may be too long for your home if you need to move fast, and there is plenty of activity.

What if your home does not sell in a reasonable time?

If your home has been on the market for months with no offers, this is a clear message that the price is set too high. What you do at this point depends on whether you really need to sell. If you’re not really motivated to move soon, you could wait for the market to move up to your price. It would be best to take your home off the market and wait for better conditions. Buyers are suspicious of a house that has been for sale for a long time. If you need to sell, consider a schedule for dropping your price until it reaches a level that attracts buyers. At the right price, you home will sell.

Whenever you decide to jump in the real estate market by selling your home, or if you just simply want to improve your home, there are a variety of things that you can do to increase your homeâ??s market value.

Increasing your homeâ??s market value can give you profit when you do sell your home, earning you more than what you spent when you first bought a home. This is usually a great tactic for people who are just aiming to play the market without real intention to keep a property that they have purchased. Nonetheless, even if you do decide to keep the home for yourself, your homeâ??s market value will increase once you have invested in its renovation or reconstruction, giving it a whole new appearance and usability.

Increasing your homeâ??s market value can be achieved by simply doing some improvements on the house, renovating it or reconstructing it to make it more appealing to potential customers, or even just for you. If your home has improved greatly from what it was initially when you purchased it, then you can bet that your homeâ??s market value has increased. Here are a few hints on how you can increase your homeâ??s market value.

One way that you can do this is through remodeling certain rooms in your home, such as the kitchen, dining room area, bathroom, living room area or even your homeâ??s den. Whenever you are remodeling a particular room, it is important to bear in mind the roomâ??s functionality, wherein you will have to take into consideration the space of the room, the appliances and furniture, and the roomâ??s aesthetic value as well, minding the roomâ??s design, color and lighting, and the harmony between all of the elements in the room.

One example is when you are remodeling a kitchen, you can increase the kitchenâ??s market value by just simply replacing kitchen cabinets with solid wood, or by adding a more expensive element to the area, such as adding an island or peninsula counter. Bathrooms can benefit from new tiles, as well as changing certain pieces in the bathroom, such as the lavatory or toilet. You can even remodel a room by simply adding or replacing your roomâ??s wall paneling with quality, real wood paneling. Changing a roomâ??s flooring will also help serve the purpose of increasing your homeâ??s market value.

Aside from making certain changes or remodeling with certain parts of your home, you can also increase your homeâ??s market value by adding certain features to your home that it normally does not have, such as indoor water features, which are great for making your home look more aesthetically pleasing. You can add wall fountains or small fountains, which can also help add moisture to the air, as well as block out noise from the outside of your house, giving your home a more soothing and calming atmosphere.

Another aspect of a home that you can improve on is the houseâ??s thermostat. If you can make sure that your homeâ??s thermostat is well-tuned, it will create a more uniform room temperature, costing you much less in your energy bill, making it an invaluable addition to your home.

Vanessa Arellano Doctor http://realestatepress.org

It should go without saying that the overall cost of buying fixer-uppers has a direct effect on one’s bottom profit line when it comes time to reselling. Of course, the main goal behind the entire process is to buy low and then resell high to make the most profit possible, which is why it’s extremely important to never pay market value when buying fixer-uppers for the purpose of reselling them.Understanding Property ValuesWithout being able to easily determine property values, no investor will be able to turn an attractive profit, not when purchasing fixer-uppers, nor when listing and reselling them. Learning how to make property comparisons by utilizing the many tools available in the real estate market today will indeed take a bit of time and plenty of research, however, the end result is more than worth the effort spent.Researching the MarketToo many investors make the mistake of relying on the internet, word of mouth, or on simple photographs in listings when it comes to researching the market and finding fixer-uppers that would be worth their investment dollars. To determine whether or not a property is truly worth it, you must personally look at it yourself with your own eyes, which also applies to looking at potential contractor’s current work that’s done at varying levels and stages of renovations. While a picture may be worth a thousand words, in this case, seeing something for yourself just can’t be beat.Many real estate agents rely upon what’s known as a CMA, or Comparative Market Analysis, when it comes time to determine the value of a property, which essentially, is a spreadsheet of information that outlines any recent sales within a certain geographical proximity to the property in question.To create your very own CMA, use data only from sales that have already been completed for the truest results rather than those that are still pending or under negotiation, and turn to resources such as real estate appraisers, the local tax assessor and county clerk’s offices, as well as the area’s local real estate brokers.Estimating All CostsEstimating all costs of your fixer-upper projects includes first the acquisition costs, which are the property’s purchase price, any taxes that haven’t been paid, and the origination fees, as well as the amount to renovate the home, such as the cost of a new roof, new carpeting, paint, or plumbing and electrical repairs.Also, never make the mistake of forgetting about any hidden costs, and you can rest assured that there are at least one or two you hadn’t counted on at the beginning of your real estate ventures. The property will need to have the proper inspections, as well as ensuring that all necessary documents are in order, like the certificate of occupancy or building surveys.Having an accurate and realistic picture of the total costs involved is really the only way to guarantee you’ll be protecting your money and enjoying a healthy return on your investments when buying and reselling fixer-uppers for profit.