Selling Your Own House

Hundreds of thousands of Americans own property in the inner city that they wish they’d never seen. They don’t like it, they don’t want it, but they don’t know what to do with it. We’re not talking about downtown Dallas -- we’re talking about inner-city Dallas.

This Old House

Maybe they inherited the property, maybe they received it in a divorce settlement, or maybe they just gradually let it fall into decay. However it happened, the bottom line is the house has become a burdensome albatross wrapped around their pocket book.

Maybe you are the proud owner of such a house. Selling your own house on the wholesale market could make sense. Here's why.

Because the house is out-of-sight it is too often out of mind. As a consequence the owner may drive by to find a code violation notice from the local governing authority tacked up on the front porch. In such cases they are often faced with the requirement to not just fix the violation, but bring the entire house up to code or face losing it altogether.

In spite of all the negatives, the property often has one overriding redeeming grace. More often than not the house is paid for or the owner is servicing a very low mortgage. The property may have been purchased for only $20,000 or $30,000 a quarter century ago. It was long since paid off, and is now valued at $100,000 or more. But to the hapless owner it might as well be a plugged nickel. No sane person will pay the asking price.

What can he or she possibly do with this white elephant besides just stick up a sign

Give Up $1, Get Back $10

The strange fact is there are people who would be glad to buy your old house – if the price is right. They want to fix it up and either rent it out or sell it for a profit. But in order to do that they have to buy it at a discount from the market value. That discount may be as much as 30-40% off of the as-it-sits value of the house.

Your first reaction is probably, “That’s outrageous!” This house is worth $x and by George I’m not taking a penny less than $x. No way! They’re trying to rip me off and I won’t stand for it one second.

But step back and think about it for a minute? Is the house really worth $x, the appraised value? How many people have offered you $x? Are people lining up at the door to give you $x? Isn’t the true value of a house what somebody is willing to pay for it in the market place. An appraiser may have told you the house is worth $250,000, but if nobody will give you $250,000 is it really worth that much?

Now take another step back and think about it some more. The house may be worth $x, but they are willing to give me $y right now, cash on the barrel head. Therein lies the magic. “$y” can leverage you into a fortune if you know how to use it wisely. That’s true even if $y is considerably less than $x.

Would you give up a dollar if somebody offered you $10? in return? You probably would, but you’d be surprised how many people won’t. The best way to make this happen is through fundamental analysis and technical analysis to identify pockets of appreciation.

But many people are like the monkey who stuck his arm in a jug with a narrow neck to get a peanut. With his fist clenched around the peanut he can’t pull it out of the jug and he is easily captured by the canny natives. Many people are hanging onto peanuts and its killing them financially.

Don't forget, when you take the discounted price, the investor is relieving you of the need to pour more money into the house to make it salable. Plus, you have no real estate commission or closing costs to worry about.

On top of that you'd probably offer any buyer the realtor brought you a 5%-7% discount to sweeten the pot anyway. Especially in today's market. Closing might take up to six months. You can save all the hassle and expense by simply taking the discounted cash offer and leveraging it into a high-performing property elsewhere.

But isn’t this the worst possible time to be dabbling in real estate? The newspapers are telling us that foreclosure rates are at an all-time high. People are losing their homes right and left. It’s all doom and gloom.

For example, you might be surprised to learn how easy it is to purchase vacation rental property with an ocean view that can return you as much as $1,000 a week or more during the 6 to 8 months of the tourist season.

That’s a subject for another page. A page that details why this just might be one of the three best times in U.S. History to be getting into real estate. That's why selling your own house, an old second house, in a 1031 Exchange for investment in rental property on the ocean could be a very good decision.

Return from Selling Your Own House to Sell This Old House