Found a deal- not sure what to do next!

2 Replies

So I found a deal on craigslist for a home, seems too good and I"m not sure where to go from here.

Based on the address and MLS the property was purchased in 2011 for about $200K. It apparently was listed in October for $180,000, and was under contract for $165K earlier this month but I guess it didn't go through. Now its listed for $156K.

One home is being listed for $230K, other homes have sold in the neighborhood for above $200K.  

It honestly seems too good to be true and I'm not sure what the next step is.  I've done some research, have the number for the (former?) listing agent, and the owners number.  

To me, it seems like this is either a pig-in-a-poke or unbelievable luck.  Any advise is appreciated!

Hey @James Phillips. You just won't know until you perform you due diligence. 

I'd start by walking the neighborhood and the property. What state are the homes in within walking distance, what are the neighbors up to (talk to them), any improvements happening or have things been getting rougher. 

Then I get someone to show me the inside. What condition is it in? That will have a drastic impact on your price point. Is it a tear down or livable at all? Need minor cosmetic fixes?

Next I try to figure out WHY they are selling. What is driving the price down. Sometimes, life provides legitimate opportunities. Divorce or death can lead to people wanting to dump solid properties quickly. Other times, it could be just an incompetent real estate agent. In plenty of cases though, it is a non-confirming, red-tagged or dysfunctional property. Just ask at least 3 times in different words, "why are you selling?"

Lastly, check with a bank that the property would qualify for a loan. I have seen properties priced quite a bit lower when they can't get funding. This happens for a wide variety of reason (zoning, violations, defunct..).

Then run the numbers. If it works for you personal investing plan, then lock it down.

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