Why Sellers Sell At a Discount

Homeowners' problems often prevent them from staying on top of their home's upkeep, and factors such as job loss, divorce, serious illness, various addictions, or other personal problems quickly overwhelm them. These sellers can't make needed repairs because of financial or physical limitations, and when that happens, their home becomes a low priority and sometimes will go into foreclosure.

Look for "Triple D"

Home sellers with three problems give beginning investors a great opportunity. A "Triple D" is a Doghouse, involved in a Divorce, and in Default. The label "doghouse" comes from Southern California Realtors who used this term to describe worst fixers. These houses maybe "tired" and need only cosmetic work in order to favorably compare with other homes in area.

What to Look for in a Doghouse

The hardest house for a homeowner to sell is a "doghouse," "dump," or "fixer-upper." These run-down houses scare off most buyers, who don't have money to cover down payment, closing costs, new furniture, carpeting, appliances, roof repairs, and other deferred maintenance required to bring home back into top condition.

As you look through classified ads or at realtor listings, keep an eye out for terms like "handyman special," "as is," "fixer," or other tell-tale words. Also have your agent use similar terms when scanning Multiple Listing Service for your target area.

Once you've found a property that you can turn from doghouse to dollhouse, find out seller's problem and then offer a solution. Distressed sellers frequently experience financial problems and need cash as soon as possible. Therefore, if you're ready to close quickly, you'll be set to negotiate a lower sales price.

How to Close Quickly

The truth is that you could probably get a much better deal and at least an equal amount of protection by shopping around for your own insurance policy.

Essentially, mortgage insurance is no different than term-life insurance. With both, your policy only lasts for a specified period of time and pays its benefits if something happens to you or your spouse. The real difference comes down to how much control you'll have over your policy and how much you'll pay for it.

If you choose to use mortgage insurance offered by bank, you will not be able to customize a policy to fit your needs and you'll be lumped together with other borrowers under a group plan. Because of this, you will only have limited control over your policy. For example, through a third party provider, you would be able to choose your own beneficiary, decide how to spend proceeds if necessary, and cancel policy at any time. You would not have these options with a lending institution.