For Buyer

For Buyer - How To Make A Profitable Home Purchase

Most average home buyers want to purchase a house or condo where they will live happily ever after. But you are far above average, right.   In addition to buying a nice place to live, you would like to earn a substantial profit on your residence, wouldn't you? Would it make a difference that those profits would be tax-free (unless they exceeded $350,000 if you're single or $500,000 if you're married and filing a joint return?

Earn a profit on your home purchase. The easiest way to earn a profit on a house or condo purchase is to buy a residence needing modest but profitable "cosmetic" fix-up. This is called buying a home "with the right things wrong."

That means the property needs easy but profitable fix-up, such as painting (the most profitable improvement of all), new wall-to-wall carpet or refinishing of hardwood floors, new light fixtures, minor repairs, cleaning and fresh landscaping.

However, avoid buying a home that needs major, heavy-duty work, which doesn't add market value. Examples of unprofitable improvements include a new roof, foundation repairs, new plumbing, new wiring, kitchen remodeling and bathroom renovation.

Five more criterion for a profitable home purchase. Presuming the house or condo you want to purchase meets the easy fix-up cosmetic tests, it's time to get serious about more criteria for a profitable home purchase. They include:

     1.   A basically sound, modestly priced residence without major structural defects. Although it's possible to profit from buying luxury fixer-upper houses in the high price range, sticking in "bread and butter" houses that most potential buyers can afford is best. That is because you will probably want to sell the residence within a year or two after fix-up, so it's best to buy a home that is near the median sales price in your vicinity.

     2. A good location. Part of buying in a good location includes checking the quality of the public schools, even if you don't have children. School information, crime rates and other useful facts can be readily found on-line. (See Community Resources on this Website)

     3 Buy at least 25 percent below the market value of comparable nearby homes in good condition. If you want to make a profitable home purchase, it's essential to buy well below full market value to allow room for fix-up costs. Whether you resell your home soon after fix-up or keep it for long-term investment, buying below market value is key.

      4. Purchase from a motivated seller. Examples of highly motivated seller include those who must sell because of a birth in the family (need a bigger house), death in the family, unemployment, illness, divorce, marriage, drug or alcohol problems, foreclosure, management headaches (if it's a rental house), retirement and financial problems. Ask why the seller is selling so you can tailor a purchase offer to meet the seller's needs.

     5. Acquire a home with affordable mortgage financing. As an owner-occupant home buyer, if you have steady income and decent credit, you can probably obtain a mortgage for 90.95, 97,100 or even 103 percent (to include closing costs) of the home's purchase price. Be sure to be pre-approved for a maximum mortgage before starting your quest for a profitable home purchase. Then you will know what price range you can afford.

When you find a "profitable" home you want to own - Get busy and make a purchase offer. Always include in you purchase offer a professional inspection contingency clause. That means, after the seller accepts your purchase offer, you have the right to hire a professional home inspector. You can then accept the report, ask the seller to pay for repairs recommended by the inspector, buy the home "as is" and make the repairs at your expense or cancel the sale and get your earnest deposit back.

Deciding to Buy or Sell a Home
Is a Serious Decision.

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