Home Rehab: How Do You Know Which Home to Buy?

The current real estate market if filled with foreclosures. If you are an entrepreneur trying to get into the real estate market while prices are at an all time low, now is the time. But, before you dive into purchasing a home to rehab and resell, you will need to know which homes to buy and which to stay away from.

BUY CLOSE TO HOME

For your first rehab adventure, it will be best for the buyer to purchase a home relatively close to their current neighborhood. This is a good idea for many reasons. The main ones being familiarity with the area and merchants.

Being familiar with the area you will be buying your first rehab in, will help you to better gauge the homes market or fair value. Buying a home even 20-30 miles away from your home neighborhood, will be a completely different real estate ball game.

Familiarity with local merchants is also an important reason to buy close to home. When purchasing a home to rehab, materials and material costs can skyrocket if left at the buying hands of any involved contractors and sub-contractors. Whenever possible, the supplies for a rehab should be purchased first hand to inhibit any possible price gouging.

KNOW A HOME'S WORTH BEFORE YOU BUY

Just because a home is listed at $200,000, and is worth $200,000, does not mean you will have to pay $200,000. Researching local comparable sales (comps), will give you the best idea of the home's market worth. A real estate agent will be able to access a list of the MLS comps from any given area. Other possible resources for comps are public tax records and for hire online services.

After finding a list of the comps in the area you are researching a home in, you will be able to offer an equivalent price to the seller. Keep in mind, sellers will be on the lookout for the highest possible sale price, and may not take your lower offer on the first try. Be patient if this happens. Wait a few weeks and if the home still has not sold, reapproach the seller with either the same offer or a slightly higher offer and the sale will be a done deal.

WATCH OUT FOR STRUCTURAL DAMAGES