6 Sources of Undervalued Real Estate

By Ronald Cagape

Profit is made when you buy. If you buy at the right price, you will have room to sell quickly at still a good price. If you buy too high, you can be stuck with an overpriced turkey.

Under normal circumstances, real estate is bought at market value. Market value is the price that a willing buyer and willingseller meet. Both parties are under no undue pressure to buy or sell.

As an investor, you’d rather be in abnormal circumstances. When buying, you’d rather deal with a motivated seller, someone who needed to sell yesterday.

Examples of motivated sellers are those under foreclosure, moving to another country in 2 weeks or undergoing a critical operation.

Sometimes, a seller may not be motivated but they have an incorrect assessment of the current market value. Maybe their old or they inherited the property and would just like to convert it to cash.

So, where do you find these good deals? Here are 6 sources for you to look at.

Online Ads – as more and more people get access to the internet, you’ll find more and more amateur sellers try to market their property themselves. They would go on online classifieds such as Sulit, AyosDito or OLX. You have to look at the online classifieds regularly because you don’t know when a bargain comes up.
Newspaper Ads – Manila Bulletin and Buy and Sell are the two common media that motivated sellers advertise on. The motivated ones usually just post 1 or 2 line ads because they are budgeting their money so you may not see the keywords that flag them as motivated. Call them anyway if they are in your target area.
Foreclosure Lists – although banks are not as motivated now as before, you may still catch them sleeping on the job. Many banks, especially those that acquire other banks, can still make mistakes in getting the value of non-performing assets. Note that banks are not property investors so try as they may to sell properties at market value, there’s still 1 or 2 that can be acquired at a bargain.
Property Auctions – auction houses also sell bank foreclosed assets so similar to #3, you can find good deals in these auctions.
Your Neighborhood – not all sellers advertise, especially those that are under foreclosure and don’t have money. Make it a point to look in your neighborhood. Look at all signs and call them. Better yet, be connected to the neighborhood “tsismis” (gossip). You just may find something in the neighborhood.
Your Network – motivated sellers are usually under a great deal of financial stress. Most of them will not proclaim it to the public. If one of your friends or relatives is under stress, you may just be the person to help them. Who better to help them than someone they trust? Of course, you can always just let them comes to us.

These 6 sources are a good place to start looking for below-market value properties. If you find one, let me know and let’s do business.