These are challenging times for many real estate entrepreneurs who are finding that the techniques and strategies they’ve relied on for years just don’t work anymore. It’s time to look for new ways to create profit centers. The good news is that there are many NEW opportunities for those willing to make some changes in your business.
In many real estate markets, selling to a retail buyer is getting more difficult and taking much longer because there is a lot of inventory available for buyers to choose from. A year ago in Dallas, we had 35,000 homes on MLS. Today, we have 75,000 homes on MLS and much more coming from retail sellers and even more REO properties.
Finding someone who can qualify for a loan is a lot more challenging than it once was because of new loan requirements. You need to get a lot more creative when selling to compete with the tsunami of inventory
While this kind of market condition may not be conducive to rehabbing and selling to retails buyers, it does create many new opportunities for you.
CREATE FAST PROFITS WITH OPTIONS
Many sellers are looking for an alternative to listing their properties with a real estate agent. In Dallas, the average number of days on the market is 7 months. Some sellers can wait that long, but many cannot. For one reason or another, they need a fast sale. It could be because a foreclosure is looming. Sometimes it is because they have a job offer in another state and they don’t want to get stuck with two house payments. And often, it is because they have a contract to buy another home and the sale is contingent on the sale of their existing home.
Occasionally, these will be great deals that you can buy subject to the mortgage (with a twist that I’ll explain later) or with a lease option that you can either keep as a rental, sell with a lease option or sell with owner financing. When you buy the house, the risks, rewards and liabilities – like monthly mortgage payments – are transferred to you so be very careful about which houses you select to buy.
To avoid getting stuck with making monthly payments on a vacant house, it’s better for you to just get an option! Your option could stipulate that you will only buy the house once you find a tenant or once you find another buyer. Jack’s made a fortune with options that stated he had to make 10%.
Once you get the option, you should create an aggressive marketing campaign to sell it to a retail buyer. The best way I have found to do this is with a HIGHEST BIDDER SALE. If it sells great! You make money. If it does not sell, you don’t lose anything except a little bit of your time and a little marketing money. Because you don’t own the property, the risks and liabilities do not transfer to you.
This is an ideal technique to use in an uncertain market like we have now.
