Episode-2658- House Hunting in a Buyers Market
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I am gonna say it isn’t really a true buyer’s market right now, not based on the prices I see. It is much more so than it was 18 months ago but super great deals are not everywhere, YET.
Yet? Yes yet! They are coming and I am going to discuss why the market is always good for smart buyers all the time anyway. That said, trust me, the recovery no matter how good it is, if it is the best one we can hope for will take time. During that time people will need to sell, not want to, need to.
When you get people that need to sell, (some always do) along with reluctant buyers (like during a recession no matter the cause) you get deals! Additionally I have had a ton of home buying questions lately, many by email but also a lot on social media. We have not covered this topic for a while so lets do that today.
Join Me Today to Discuss…
- Finance options
- FHA
- VA
- Conventional
- Hybrids like 80/20
- Let me be clear, don’t ever do an ARM loan, EVER!!!!!!
- The 1% Effect selling formula (houses that get top dollar)
- Using the reverse 1% effect as a buyer
- Identify the homes that
- Show 1% worse then most homes in the price window
- Find homes that are on the market for more than 90 days
- Find empty homes (already bought another or a failed flip)
- Be a smart and savvy negotiator
- Identify the homes that
- Finding a home
- HOAs are the devil
- List your wants and rank them from 1-5
- 1 – I have to have it
- 2 – I really want it and likely won’t be totally happy without it right away
- 3 – I really want it, I don’t want to give it up, but I can do without it for a time
- 4 – I would like it, but I can live without it
- 5 – It would be nice, but I won’t really factor it into my decision for the right property
- As you find homes that don’t have what you want, rank them from 1-5 as well on the permanence scale
- 5 – There is no way I can ever have it in this home
- 4 – It is possible but very expensive or very difficult to do
- 3 – I can have this for a reasonable cost, at some point in time down the road
- 2 – I can have this for a reasonable cost, relatively quickly
- 1 – I can have this with simple sweat equity, it will just take work
- Making your decision on which house to make an offer on
- Communication with buyers and doing the agents work for them, you likely have to, most are morons
- Spirko’s 6 Laws of Buying a property
- Rule One – Never overpay for a property
- Rule Two – Never get emotionally invested in a property
- Rule Three – Never overpay for a property
- Rule Four – Be willing to walk away from any deal
- Rule Five – Never overpay for a property
- Rule Six – Always buy with thoughts about an exit strategy
- There is no magic, but there is being smart and 1% smarter then average is enough on either side of the deal
- They key is a clear but reasonable vision of what a property can be, vs. what it currently is
Resources for today’s show…
- Follow Life With Jack on Instagram
- TSP Facebook Group
- Join the Members Brigade
- Join Our Forum
- Walking To Freedom
- TspAz.com
- Carry on My Wayward Son – Anthrax Cover
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Please provide a link to your ebook you referenced in the podcast.
https://amzn.to/3fHghG6
In case anyone was interested, the book about the 1% effect actually has a different title. Here’s the link.
https://www.amazon.com/SELL-YOUR-HOME-NOW-Percent-ebook/dp/B06Y5Q5VC2
Evelyn
PS Oops! I didn’t refresh first
I wish I lived in Texas so I could take you and Dorothy out to dinner somewhere fancy and just pick your brain on this for an hour or two.
I just sold my first house and over 6 years ended up with approximately 60% ROI by building loads of sweat equity doing simple things myself. I bought the house from an estate that really was only interested in just not dealing with the house and converting it to cash they could bicker over so it was the perfect situation to be in as a buyer. It was suffering from the 1% phenomenon you mentioned as the house had been vacant for a while, the family selling it were out of state and didn’t bother doing anything to make it look nicer, and so it showed like absolute shit because of it.
The house had the NASTIEST carpet, but these beautiful original 1960’s hardwood floors under it. The day I closed I started ripping it out, that weekend got a guy to come over and refinish the floors which he did for a couple hundred bucks plus materials since it was so easy with a totally vacant house. In not even two days of work the house immediately likely became 10% more valuable.
So, once again, you’re totally correct on your 1% effect, but I’m still going to pick up a copy of your book though so I can nod along in agreement!
We recently followed your advice in walking to freedom, moving from the house I sold in the state government crime syndicate of Illinois to a month to month rental in Tennessee to serve as home base while we looked for another property. I did this primarily to have maximum leverage when negotiating, as we’ll be able to get under contract with no contingency and my partner works for a mortgage company so she could have us closed in 15 days or less if all the stars align properly. I think being able to move very quickly with no strings attached will work in our favor?
One thing I don’t understand from listening is why if you have the 20% down for a typical mortgage why would you ever fool around with FHA or VA loans? If there’s a fee I can avoid paying, I do everything I can do make that happen. PMI to me is basically just the bank stealing my money to insure myself and my ability to pay a loan back. Why would you ever volunteer to pay that? I’m just curious if you could share some of the models you used in this decision, or at least get me on the right path to figuring out that decision as I’m at a loss as to why you would ever volunteer to pay PMI unless you were 100% confident the money you were using to rehab a place and what you would pay for a refinance would be less than your PMI?
For us, PMI is less than $52 a month, or under $650 a year, on a $250,000 property. The upfront cost difference between 20% and 10% would take over 30 years to break even.
Upfront of $50,000 versus $25,000 is a $25K difference, $624 goes into that 40 times.
In this instance, the PMI makes sense. Especially since we intend on moving in the future.