Are you looking to find a cheap house for sale? Well let me tell you, it's getting more and more difficult as the economy continues on this road to recovery. When I was looking to buy my first home in 2011, finding a cheap house was incredibly easy. Foreclosures were going up left and right and I had my pick of homes that were less than $80,000 (some of them were down near $50,000). In the end, I decided on a $75,000 three bedroom, two bath home that's worth over $120,000 today. It was a great time to buy, and in retrospect, I kind of wish I had bought three or four houses instead of just one! I would be much richer today if I had.
How to Find a Cheap House in this Market
No matter how hot the market is, there are still ways to find a house that is well below market value. You might need to walk through 200 houses in order to find it, and you might need to have some vision to find that diamond, but it's out there, just waiting for you to find it.
So how can you find a cheap house in this market? Follow these five tips and I'm confident that you'll find the value you're looking for.
1) Use a Realtor
If you are a buyer, it's pretty much a no-brainer to use a realtor to find a house. Their job revolves around exploring the housing market day in and day out, and their earnings are paid by the seller! So not only do they have more knowledge than you on the subject, it costs you no money and no time to use a realtor.
When selecting a realtor, however, do not do it haphazardly. Just because your brother-in-law is a realtor does not mean that you should go with him. In order to be most effective with your time, you want a realtor that understands your needs, is punctual, and has a large network of realtors that will give him/her leads based on your needs. Take your time and interview a couple of different people. When you're ready to get started, have your pick and start hunting!
2) Search HUDs, Foreclosures, and For Sale by Owners
Houses that go up for sale through a real estate agent rarely get purchased for a steal of a deal. First of all, the realtor knows the market and will price the home according to the comps in the area. Secondly, people that list their homes with a realtor are being careful and are looking to get the most money out of the deal.
If you want to find a deal on a home, then you should be looking at HUD homes, Foreclosures, and For Sale by Owners.
HUD homes are technically foreclosures, but are a result of a defaulted FHA loan. The prices on these homes are often very reasonable and go quite quickly – take a look at Hud.com for listings in your area.
Foreclosures can be found through Zillow and Trulia, but it takes a few days for them to show up. This is when it's best to use a realtor so they can tip you off immediately when one hits the market. Since the banks really don't want to hold property, you can often offer 10-15% below the asking price and still make a deal.
You should keep your eyes open for For Sale by Owner signs because these houses are being sold by people that want to save a buck on the realtor costs, but might not have a great feel for what their house is actually worth. This isn't always the case, but if you see a “For Sale by Owner” sign, it might be worth taking a quick look.
3) Walk Your Desired Area
If you have a desired area in mind where you'd like to live, be sure to walk through the neighborhood once every couple of weeks (and at different times during the day). One reason for this is to get a feel for what goes on in that area. Are people typically outside with smiles on their faces? Are there any garage bands playing? Is there any domestic shouting? There are many things that you can take note of just by walking the neighborhood instead of driving.
The second reason for walking the neighborhood is to spot a house that's going up for sale. If you see a couple working in the yard or touching up some paint, walk on up to them and ask if they're thinking about selling. Let them know your interest and who knows, you might be able to buy their house before they even list it.
On the flip side, you might notice a house that is becoming dilapidated and the yard and landscaping is overgrown. This is likely a home that is either going into foreclosure, or someone has passed away and the family is still trying to figure out what to do with the property. Ask the neighbors for information and get in touch with the owner (or relatives) of the house. This could easily turn into a steal of a deal.
4) Be Sure to View with Vision
The absolute best deals I have come across have had terrible landscaping, ugly interior paint colors, and stained carpet. Sure, they didn't have the initial appeal, but the layout and structure of the property were solid and needed no major work done.
If you want to find a deal on a house, you might need to look beyond the paint, carpet, and non-existent landscaping. Most people will walk away from these homes and leave the seller discouraged, which is exactly the time when you should swoop in and make your offer. Carpet, paint, and landscaping might cost you $5,000 to replace, but if you can get the house for $20,000 under market value, don't you think it'd be worth it?
5) Don't Be Afraid to Make a Low-Ball Offer
When making an offer, people are so afraid to offend the buyers they're sending the offer to. Sure, it might seem like the number of houses on the market is slim, but that's no reason to overpay for a property. If the house you're interested in is listed for $225,000, and the houses in the area are selling for $215,000, then why not start the bidding at $200,000? If the sellers are unwilling to negotiate from that starting price, then they might be sitting on their house for a while. But, even if the house sells quickly, that just tells you that someone else was unintelligent and willing to pay too much for the property. There are plenty of other options out there. Out of the hundreds of properties, you will almost certainly find someone that entertains your low offer. Don't be afraid to low-ball, because one of these times it's going to get you that great deal you were looking for!
Are you trying to find a cheap house in your area? Use these tips and you'll likely find one!
Get the FREE Personal Profitability Playbook
Earn more, spend thoughtfully, grow your wealth, and live a better life through mindful personal finance.