A Cure for First-house-itis

By Bill Edwards

As a Realtor at Lifestyles Unlimited®, I continually see signs of a sometimes paralyzing affliction I call firsthouseitis.

Those afflicted exhibit symptoms such as poring over MLS listings for days or even weeks, and analyzing every foreclosed property in the six-county area surrounding Houston.

Firsthouseits

The most blatant symptom, however, is the inability to ‘pull the trigger’ once a property has been identified that meets the investors’ investment objectives.

The good news is that there is a simple and painless cure for firsehouseitis. It involves a paradigm shift. Once a property is identified which meets investment objectives, your immediate goal is not to buy that property; the first goal is to get an option period.

Lifestyles Realtors write contracts in such a way that you get a five-, seven-, or sometimes a ten-day period during which you conduct inspections and get repair bids from contractors and specialty service vendors. The amount of days depends on the seller and/or the negotiated number, and is usually free or at minimal cost on foreclosures.

Once you have an accepted contract, work with your Realtor to set a time to do an inspection. A good inspector will spend about two hours in that house. Schedule a roofer, a painter, an A/C person, a foundation person, etc. (whatever particular repair person you need) to meet you at the house at that same time to provide you with estimates.

Also contact your insurance agent during the option period and ask what is on the CLUE (Comprehensive Loss Underwriting Exchange) report. Your agent will be able to tell you whether that property has had rising water or any other claims. The agent will also be able to give you an estimate of the annual premium to cover the property.

After you receive the inspection report and the repair and insurance bids, meet with your mentor before your option period expires and rework the numbers to see if the deal is still good. If not, your Realtor will send a termination form to the listing agent and you have no further obligation to buy that house. Your only expense would have been the $250 to $300 for the inspection and a few hours of your time.

However, if the numbers DO work, you THEN go forward with the deal.
By using the option period to assemble estimates and reanalyze the deal, along with your mentor’s advice, you have eliminated firsthouseitis and bought your first investment property.

If you remember that your first goal is to get an option period, chances are you won’t develop secondhouseitis.

Comments

  1. Thanks for the feedback, Dan. I’ve got search on my list of to-do’s.

  2. I love the new design, you guys have a lot of valuable content in the past, But the search has been missed, How can I do a search on the website.

    Thanks
    Dan

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