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| 10 Questions To Ask Your Real Estate Investment Advisor - Part 1 |
By:
Joe Ard |
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Whether you are an experienced investor or just a beginner, you should always beware of the guru
who read a couple of books and armed himself with some general information. I'm not talking about
the book and tape salesperson here, but rather the realtor, wholesaler or self proclaimed real
estate specialist who is trying to sell you an investment property. Whether you're buying a
property or going into business with someone, you should always do your homework.
In this article, the first of two parts, I'll offer some of the questions you should ask anyone
before working with them.
1) Are you, yourself, an investor and how many properties do you own in the local area?
If they answer "none" or say they just rent an apartment, run!
Watch out for the slick book and tape sales people who don't own any investment property and know
nothing about the local market. They will take your money and run. I met a new investor last year
who had paid over $5,000 to attend a two day seminar taught by a guy out of California who knew
nothing about the Atlanta market. Nothing good can come of that. Deal with locals who not only
know the concepts but can help you find the right properties to invest in.
2) Can you provide me with a list of bank owned and foreclosed properties in my area?
If they can't provide this, run!
If they can provide you a list, pick a property on it and ask this next set of questions.
3) What's the property's tax value?
This is a "DUH" question - if the Realtor or Investment Specialist can not give you the assessed
value of a property, they need change careers. You would be surprised by the numbers of "PROS"
that don't even know where to start to look for that information.
Generally, the tax value or the accessed value put on a property in Georgia is typically 10 to 20
percent below the market value. When I start my search for possible deals, the first thing I look
for is properties priced below the accessed value of the property.
Example #1
List Price is $200,000
Accessed Value is $220,000
This might be a possibility because I estimate the Retail Value of the house to be 10% higher than
the Accessed Value or $242,000.
Example #2
Just reverse #1 - list price is $220,000
Accessed Value is $200,000
I probably would not consider this house because I estimate the Retail Value of the house to be
$220,000 - no deal here!
Remember tax value is only one of the factors you should consider before buying a house but I
consider it a good starting point. If someone is trying to sell you a property and they can't
provide tax value, it could be they don't want you to know.
4) Can you give me a list of comparables in the area?
Another "DUH" question. Most Realtors can pull a Comparative Market Analysis (CMA) which will
show the sales history for the past year to include the following categories: Sold, Expired,
Under Contract, and Active Listing. Additionally, the Realtor should be able to provide a Area
Market Analysis (AMS) which will provide the average Days On Market by category.
5) How many days has this property been on market (referred to as Days On Market, or DOM)?
If their reply is “I don't have access to that information”: run. Any Realtor should know that
information is available but finding it is the trick. Keep in mind the length of time the
property has been on the market does not coincide with the foreclosure date. It could take 30 to
60 days after a property has foreclosed to get it listed with a realtor and into the MLS.
Why are days on market important? The longer the property has been on the market - the more
flexible the seller. Banks and other financial institutions are not in the property management
business. Everyday expenses include loss of income, maintenance, insurance, and possible
vandalism. I like to submit low offers on properties that have been on the banks books for over 4
months. Offer cash with a quick closing - you will be surprised how flexible the banks will
become considering it may be the only offer they have received on the property.
About the Author
Joe Ard has been investing in real estate since 1978 and is a foreclosure specialist and
co-founder
of Veslet.com. His vast experience working with real estate
investors led him to design the formulas currently used for successfully bidding on HUD
foreclosures. Originally from Mississippi, he has lived in Fayette County, Georgia for 16 years
with his wife. |
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