Buying a property that will be difficult to sell later on is one of the biggest mistakes home buyers can make. It happens so often that you wonder what buyers were thinking (or not thinking) when they signed the purchase agreements. Three of the most common reasons buyers give as to why they bought a certain property is that they couldn’t resist, it was such a good deal, or it was the biggest house they could find for the price.
Some buyers purchase properties to fix them up and live in or resell for a profit. This can work if you buy the properties cheap enough and you estimate the fix-up costs accurately. But many buyers who do this find that when they add the home’s purchase price to the fix-up costs, they’re at or above market value.
If you want to go this route, you need to know the market in that area and be able to estimate fix-up costs accurately. Days-on-market (DOM) is an important indicator to keep in mind, because it alerts you that a home may have problems. If a listing’s DOM is over the area average, look for the reason.
Sometimes a sale or two fails and the home was taken off the market during the under contract period, and this can run up the DOM meter; in most multiple listing systems, the DOM counter doesn’t stop ticking until the sale closes. Typical hard-to-sell properties include: Homes that back onto railroad tracks, freeways, industrial areas, high voltage power lines, frontage roads, or other obvious value killers. Homes that are overimproved for their area.
Related posts:
- Mistake #10: Investing in a Property That is Hard to Sell Part (2) A typical example would be a 900-square foot bungalow with...
- Mistake #4: Alienating the Sellers, Thereby Losing the Deal Part (2) Don’t ask sellers what would the lowest price would be...
- Mistake #3: Buying a Home Before You have Sold Your Current One If you own a home and sign a purchase or...
- Mistake #4: Alienating the Sellers, Thereby Losing the Deal Buyers often say and do things when dealing with sellers...
- Mistake #14: Being Unable to Make a Decision When you’re searching for the right house, take your time...
