Let me share a story with you:
It's 3:48 pm on a Thursday.
The phone rings. It's a woman who lives in a nearby town who needs to sell her house quickly.
The taxes haven't been paid in 3 years and the County is going to foreclose in less than a week.
She owes $40k in back taxes and her house is worth $140k.
If the county takes the house, it will be sold at auction and the county keeps ALL the money.
Some counties keep the "overages" made at auction. In other words, when a property sells for more than the taxes owed, the county keeps the extra money.
The previous owner gets nothing.
Given the speed that our team would have to close on this deal, we offered her $90k.
She had two options:
1. Let it go to foreclosure and get nothing.
OR
2. Sell it for $90k and walk away with some cash.
Here are how the numbers work out:
As-is property value = $140k
Offer price = $90k
Projected profit before closing costs = $50k
These deals are called "off-market" deals. Time is of the essence and the owners have no time
to list their house with a broker.
As a result, you have little to no competition and you can find properties for pennies on the dollar.
Here a few other examples of off-market deals:
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| Dave Clabeaux |
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| Dave Clabeaux |
Finding off-market
deals is smart. You get a house with enormous amounts of automatic equity.
You can find off-market deals on classified listings, FSBO sites, by posting bandit signs, online marketing campaigns, and networking connections.
If you're looking to do your first deal, an off-market deal may be a good option. Because there is so much built in equity, lending is typically not an obstacle.
Plus, you have plenty of room for any surprises or mistakes.
