I know a property buyer who works Sacramento County. He works an area where about 6,000 homes are available for sale at any given time. 12,000 single family residences, townhouses, condominiums or lots have been listed on the Multiple Listing Service the computer service Realtors list properties for sale on for the county this year. There are also countless others who need to sell but have not approached anyone to help them.
This property buyer told me, I know every good deal in this area. Now I know this buyer. He is good, bordering on great at what he does. But how can he know every good deal in the area? I’m a system guy. I’ve tweaked and adjusted Alexis’ and my methods for locating property every which way. But I know I miss good deals. I’ve trained a small army on the nuances of my system, but the guy I train tomorrow will still find a good deal everyone else missed, even my property buyer friend.
Making a deal is an art, finding a deal is a science. The science I practice. I study the nooks and crannies deals hide in. I look for deals. Where do I look?
In Sacramento County, there are about 250 foreclosures every month. This is a good place to look. There have been more than 2,000 trustee’s sales this year in Sacramento County. This is a good place to look. There have been almost 4,000 notices of default recorded in Sacramento County this year. This is a good place to look.
Of course I look in the 12,000 listings this year on the MLS too.
To have seen all the possible deals in Sacramento County so far this year I would have to have looked at at least 15,000 properties. In other terms, about 120 every day or 10 an hour. If I had looked at them all I would be a very busy man. In my wildest dreams I don’t care to know all the deals.
How can our property buyer claim to know every deal? When pushed he admits, I know about all the deals in the areas, price range and condition I’m interested in. Â In this answer is the beginning of my deal finders science, isolate big, easily definable, parameters by which to judge incoming data.
The way I do it is simple enough that I think I can begin to explain it here to you. First, I suggest you subscribe to Daily Default Infoservice or County Records Research. These companies provide foreclosure notices. Both services provide all the notices of default and notices of trustee’s sale recorded. DDI adds all the trustee’s deeds finished foreclosures, commonly known as REOs.
Next, sit down with a Thomas Brothers Map Guide and figure out in what zip codes you will and won’t buy property. For the first cut zip codes work great. The computer can easily search the data and show you just the property in the zip codes you are interested in. If a default or REO is in another zip code don’t work it. See I told you it was simple.
Next decide what price range you want to work. I suggest working homes that will sell for 70% to 100% of the median price. Larger properties are tougher to sell and require more cash. Smaller properties have to be bought for too small an amount to make a reasonable profit. Again the computer can be a big help in identifying these properties. Many companies offer CDROM data bases of recent sales. I like Dataquick, Property Pro CD or CMDC. Both offer a searchable database, CMDC also offers a printed book indexed by Thomas Brothers Map Grid.
Lastly, look for fixer uppers. The best deals are made because the seller’s property was no longer in saleable condition. The owner was either unable or unwilling to do the necessary repairs needed for the average homebuyer to purchase. Property buyers make their money by taking the risk of deferred repairs. They invest their cash in purchase and repairs. They hold their breath until the property sells. If they negotiated right and made the right decisions they will make a substantial profit.
You can’t tell the condition of a property on your computer. For this you’ve got to get out in the field and look. But if you drive up to the house and the lawn is mowed and there is a freshly painted picket fence out front keep driving. This owner will get more than I am willing to pay.
Go through the three steps I’ve outlined above with every property on your foreclosure list. You will quickly chop too many leads into a workable number. Isn’t that the purpose of a system?
