I had to go to the grocery store on Saturday afternoon to pick up some basic items. You know, bread, milk, tomatoes, etc. Our neighborhood store is closed on Sundays so during the last few hours on Saturday they typically mark down some perishable foods with heavy discounts. It's quite tempting to purchase some of these reduced items until one remembers that there's a good reason they are so cheap. That bargain loaf of bread is approaching its "sell by" date. Before I can finish the entire loaf it will probably become stale and I'll have to get rid of half of it. Likewise, that half-gallon of milk is about to expire; by the time I can finish half of it, the milk will most likely turn sour. And that pre-packaged group of six tomatoes? They're already getting soft. How will they be in 2 or 3 days? Yuck! Sometimes cheap really is cheap. The property market can be very similar to the food market - there's always a valid reason that a discounted home is priced so low. Discovering why a cheap property is priced so low is essential to figure out if it is truly "worth it" to pursue. Getting the advice of a buyer's agent can be a very prudent move before jumping on a cheap property. The reasons that homes are offered at bargain prices can normally be classified into just a handful of categories: 1. The Fixer-Upper Quite a few houses that have fallen into disrepair can be purchased at prices well below the local market price of properly maintained homes. If the current property owner is reluctant or unable to make necessary repairs their only option would be to offer it for sale at a bargain price. If the idea of investing "sweat equity" (i.e. manual labor) is particularly unappealing, you may want to stay away from this type of cheap property. Likewise, if paying someone else to carry out the required repairs is out of the question - walk away. However, If the prospect of a major do-it-yourself project doesn't make you uncomfortable, these fixer uppers can be an tremendous choice 2. A Less Than Desirable Location We've all heard the maxim that the three critical factors in real estate are location, location and location. Well, it's true. The value of a property can vary quite a bit depending upon its neighborhood. This can be fabulous for the home owner in a desireable neighborhood. However, it can be distressing for a homeowner in a location that has fallen on hard times. Contrary to many people's beliefs, real estate values do not always increase over time. In quite a few cities, certain neighborhoods that have fallen on hard times are gradually being revitalized through renovation of individual houses. As these improvements expand, the value of homes in the immediate area can begin to climb. Your buyer's agent should be able to give you an idea about the direction that prices are moving so that you can make a thoughtful decision about the true value of cheap properties that are in this category. 3. "Marked Down for Quick Sale" Situations may arise when a property owner must sell their property without delay. These can include a desire to liquidate assets for cash in hand, a need to transfer for employment purposes, or the need to put an end to paying double mortgage payments after committing to buying another property. This category of cheap homes normally provides the best value. However, quite often these bargains are not on the market very long since a speedy sale is the goal that the seller had in mind in the first place. The best strategy for finding these opportunities as they crop up is to have your buyer's agent notify you when new property listings hit the market. Most real estate agents have access to automation tools that will notify you via email the same day that a house that meets your prerequisites is listed. Without that edge, it's likely that you'll miss out on these prime opportunities. 4. The Challenge of the Unknown This is the "catch-all" category for homes that don't seem to fit any of the three preceding categories. They are the most questionable types of properties and should be thoroughly checked with extreme caution. There is always a reason for a property being priced below market - if it's not apparent from the start you may have to do some major investigating before considering a purchase. Sellers are required by law to disclose any negative information that has an impact on the house's value. Your buyer's agent will prove invaluable in these cases by helping you ask the right questions. Enlisting the advice of a buyer's agent and investigating the reasons for "bargain" properties are the keys to determining the true value of a "cheap" property. These deals can appear to be very attractive at the outset but, with further investigation they can end up being either a "money pit" or a marvelous opportunity. It all depends upon performing your due diligence.
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Seeking the advice of a buyer's agent and investigating the reasons for "bargain" properties are the keys to determining the true value of a "cheap" home. These deals can seem very attractive at the outset but, with additional investigation they can result in being either a "money pit" or a fabulous opportunity. It all depends on your due diligence.
RESOURCE BOX Jim Navary has been a freelance writer and researcher for over thirty years covering a broad range of topics. He is also a licensed real estate salesperson in the Commonwealth of Virginia specializing in Colonial Heights VA real estate and Tri Cities VA homes for sale.
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