AboutDennis Herman Expertise I can answer questions on Real Estate such as question on writing an Offer to Purchase. What can go wrong after an offer is written? What is Buyer Agency and what will it do for me? What is a foreclosure? What is the difference between a foreclosure, a bank owned property and a short sale? What is the best way to locate a property? What steps can be taken to avoid foreclosure? How do Real Estate Agents get paid? How can I quickly build equity in a home? How do I view homes? What types of homes will have the best prices? How do I choose an agent? What types of financing are available?
Experience Residential and commercial real estate. New home purchases. Buyer Agency. First time home buyers. Foreclosures, bank owned properties, estate sales and short sales.
Organizations Greater Milwaukee Realtors Association
Wisconsin Realtors Association
National Association of Realtors
Publications http://activerain.com/bloghome
Education/Credentials State of Wisconsin Licensed Real Estate Sales Agent
Accredited Buyer Agency Training
Relocation Training
Certified Senior Citizen Representative
Wisconsin Real Estate Continuing Education
Can you help me come up with a basic guideline for determining potential profitability if I am going to take on a foreclosure short sell. An algorithm of sorts. I want to use it to understand where my cut off points for negotiating with the bank, the eventual buyers and also the current lien holders, debtors and the like who will need to be paid upon the eventual sale.
I know there is alot to this whole process and me team is has several us of doing different pieces of research and knowledge gathering.
Thank you very much.
Ps. I am also tasked with finding out precisely what goes into a shortsell package we will be presenting to the bank who holds the loan. I know it will differ depending on the bank. I live in Washington state.
William
Answer Investing in foreclosures is much more than numbers.
Many people are looking into Real Estate as an investment. The first thing that comes to mind is buying low and selling high. Most buyers think, to buy low you need to buy a foreclosed property. That may be true but some very good deals can be found by looking at individual sellers. One of the best properties to invest in may also be found at estate sales.
There are a few things to look into when considering a foreclosed property. The condition is obvious. One aspect often over looked is the competition. Check to see the number of foreclosed properties in the general area. This is very important. When it comes time to sell the property you do not want to be competing with a dozen or so foreclosed properties listed at rock bottom prices. Every potential buyer looking at your property will be considering the prices in the neighborhood. When it comes to write an offer they will expect you to sell at the lowest price they have seen.
When looking at investments stick to an area you are familiar with. Work in an area you know the property values so when a deal comes along you can act quickly. Identify an area with property values that have remained steady over the past year. A good Real Estate Agent will be able to help you locate an area and send you updates on the prices. Both list prices and actual sale prices.
Assemble a team of professional that will help you. Your team will consist of at least a lender and Real Estate Agent. You may also want to add an attorney. Depending on your skills you may also need contractors for the plumbing, electrical, roofing and other areas of the structure. Know how much money you will have to spend before writing an offer to purchase. Don't forget the landscaping. Many buyers will demand a $10,000 price reduction of they see a weed in the yard or the grass is too long.
Put everything in writing. Make a list of all the costs. Not only will you have to pay the purchase price you will have to pay closing costs if you are getting a loan. You will also have to pay interest. Detail the cost of improvements. Make a detailed check list for yourself before you begin looking. When I deal with clients looking at building a new home I supply them a detailed list of everything they may want to consider. This list is constantly growing. I also have a list for every buyer and seller I work with. As each step is accomplished I check it off and fill in the date it is completed.
Invest wisely and you will know how much money you will need to invest and you will be able to estimate your profit. The most successful investors will not try to make a fortune on one property. They will price it to sell quick, at a reasonable price. They will than take the profit and reinvest in another property. It is like the story of the tortoise and the hare. Better to have a small and steady income than to be sitting on a large one waiting for something big to happen.
I can not even take a stab in the dark at a budget for investing. Each property has advantages and disadvantages. Prices for labor and materials depends on your area. Here is a list to consider but this list is far from complete.
Purchase price
closing costs
repairs
taxes
city inspections, licenses and fees
insurance
time, money, gas
materials
unexpected losses and expenses
maintenance
Now you are ready to sell. Add the following costs.
Real Estate commission
Advertising
taxes
closing costs
city inspections
Add all of these up and you will have a budget. I don't know of any magic formula.
