As promised, I’m going to share the story of how a lazy realtor added 50% to the value of our most recent house purchase. In fact, not only did they add to the value of it, they probably forced most other potential buyers away from the sale. Before I get into the details I should preface it with why it worked out. I posted on facebook the other day that “you will never lose if you’re not in the game, the trouble is, you will never win if you’re not in the game either.” The point being that if you are actively engaged in an investing lifestyle, you don’t have to even look for these deals because you will encounter them almost accidentally along the way. I did NOT find this deal because I was carefully watching for someones mistakes. I found it simply because I was “In the game”.
I’ve shared this with a few people so far and have already heard several “well, this was meant for you” and “You got lucky there” and “you were in the right place at the right time”. NO, anybody could have received the benefit of this deal. In the geographic area we are buying in, we look at every property available. When you look at every one, you find the ones with potential. When we can’t look at every one, we at least screen them online to narrow the list down to something manageable. If you can’t look at them all, you can certainly look at a few that have been pre-screened ahead of time for value. If that’s too much work, then you are simply “Not in the Game!” Heres the story……
We looked at every property that was available in our area that fit our buying criteria. One of them stood out far and above all the rest for price and size and features. Our realtor called the listing agent to get some details and we were told that no one had really even looked at it. The value was obviously there so we made and offer and got it under contract. That simple. Two days before closing we received the packet of information from the selling agency (it was a foreclosure) and they had prepared an appraisal which matched their listing price. It listed the square footage as 700 sq. ft. Our appraiser went in and said after measuring, it was over 1,500 sq. ft. Hmmmmmmmm.. We looked into it a little bit and discovered what had happened.
The realtor being too lazy to go out and measure the property, or use county tax records, turned in stats that he/she got off of a website that is a good tool but notoriously inaccurate. They used it because its quick, easy to navigate and is right about 70% of the time. After generating the listing, a “drive by” appraisal (and maybe they didn’t even drive by, they may have just used the info that the realtor supplied) was generated that determined the “value” which determined the “sales price”. At 700 sq. ft., nobody is interested in even looking at it because who wants to live in a 700 sq. ft. house? We looked because… well …..hey, we look at everything. We’re playing the game at full speed.
So, when we see what had happened we just shook our heads. The seller on this property was a government agency. (and we wonder why our government is so screwed up) They cross every “T” and dot every “I” and can still bungle the most basic things like getting the sq footage right. Anyway, our appraisal came in easily over 50% higher than the one provided, almost exclusively due to the doubling of the actual sq. ft.
Here’s what it means. Anyone who is actively engaged in the business can find this kind of thing more often than you think, if, you are actively looking for it. When we started, we looked for every glitch and advantage we could find while searching for our deals. The only difference now is instead of panning for the one nugget, we use the big “end loader” approach and sift all of the deals down through our property “processing machine” which is a more efficient method now for us.
“You will never lose if you’re not in the game, the trouble is, you will never win if you’re not in the game either”. Which will you choose.