I have been investing in real estate for over 10 years , and as a regular ebayer thought i would check out the real estate offerings. I will tell i learned to hate EBAY properties for sale very quickly- I expected to see sellers wanting to sell their properties as a FSBO type of situation but quickly learned EBAY was full of investors, These investors are flipping proprties for twice the market value, and as i researched new areas I have found many will down right LIE about what they are selling and take for granted the fact that there are hard working - but then again naive people looking to purchase those properties. PLEASE if you are one of these hard working people just looking to buy a family home- take a minute to read on.
I will state a few of the issues i have found with the properties for sale on ebay, and please keep in mind I am not a expert - and im sure there are issues i am overlooking- but i worked as a real estate agent for 2 years, and a investor for 10.
-Most of these people do not now or never have owned a clear title to the property they are selling you. All that means is they are probley investors whom purchased the property as distressed, maybe as a foreclosure, or by tax auction, or maybe even from the owner themself that didnt own a clear title. At the time of purchase the investor or flipper did not ask for a title search and did not obtain title insurance. A tip- get a title search and have the insurance to back it up. The average cost of this is around $600 and it can avoid any future headaches...Well if you do not have a clear title to a house its almost as if you never owned it. There are any properties for sale on EBAY along with other online advertising sites - where people are selling a property that they themselves DO NOT own free and clear , now that they figured out that they make a huge mistake - they are wanting to get rid of it ASAP and at a reduced price. Although chances are the ebay seller is selling a legitamate title - It cant hurt to check into because this can be one of your biggest headaches.
- Some of these investors have not actually seen the property they are selling you. Give it most people are honest and will not advertise that they do know anything about it or have actually seen it. But they will show you photos which were not taken by them, and they will not claim that they have been taken by them. They will hire someone else to take the pictures, and post them just as a picturiol of the property to be sold, In addittion they will not state when the photos were actually taken. But this is why you are buying the property AS-IS- because the photos only pictate the place - and lets admit it photos can lie!. Lots of these photos are 2, 3 or more years old and were probley obtained from when the place was up for sale several years ago - while it was still in descent shape, DO NOT take it for granted that just because there is a photo posted that it was taken recently, worst case scenario- the place has yet been demolished or burned to the ground!!! Believe it or not that is VERY common!!!! Basicly if you have a specific question about a property- ASK it specificly. Also ask how that information was obtained.
- Sometimes the seller will give you a estimate of the value- and most of the time that estimate is taken from the last appraised value set by the state and appraised by the cities tax appraisers. Keep in mind this almost NEVER reflects the actual market value. The value that is presented may have been established years ago. Either way you want to definately verify the value by looking at other comprable property for sale in the area. But you should be able to get a good idea by doing some research online- serach for local real estate agents selling property similar in size and location to the one your thinking about purchasing. More often then not you will be surprised to find that many are availble at the same price in the same city. A local real estate agent can help you get a idea also. Also keep in mind sellers almost never show you real pictures of vacant land- but rather highlight points of interest around that vacant land, when you do see a bunch of these pictures of the surrounding area- a red flag should go up in your head- think of it this way- if it was a great peice of valueable land, why wouldnt they show you a photo of it??
-When a auction says do you due diligence- you better cause thats pretty much means the owner takes no responsibility for what they are selling you except what it listed on the auction. Ya know when cities do a tax auction, or when banks do a foreclosure sale- It is done exactly the same way. AS IS means exactly that. And even though owners may leave out a few 'minor details'...if they say AS IS , Or do you due DILIGENCE.....then its perfectly fine for them to leave out those details. A few things you will have to check up on are, you can contact the local city government into the department of building, taxes and financial to find your answers for the following questions.
- Ask if there are any code violations for the property.
- Ask if there are any demolition orders.
-Ask if there is a need to have a certificate of occupancy required.
- Ask if there are any back taxes due that are transferrable.
- Ask if there are any tax leins, mortgage leins or private leins on the place.
- Ask if there any easements or encomberances.
_ Ask who the current owner of the property is, and verify that name before handing any money over!!!!! Seriously - people sell properties all the time - that they do not have the right to sell- it sounds outrageous that this could happen but it does. By the time you have figured it out the seller has long spent your money and a costly law suit in your favor might get your money back over the next 10 yrs.
- you may even want to verify with the tax assessor the size of the lot, square footage of the property and use of the property if you dont know the area. Its to often that people think the house is larger , or think they own more land. Estimates are most often wrong , so do the leg work and make some calls just to be on the safe side.
- If it is vacant land you are looking to purchase- keep in mind that every city in every state out there has rules to what can be built and where it can be built. And If your like me where ya live in a area where the average home in on quater acre, well there are many states that will not let you build on less than 1, 5 or even 10 or 20 acres of land. Also if someone is selling land as a sub-division does not nesassarily mean that its a sub division to be built on, Many subdivisions of land are done against the law - but once completed are legally exceptable (its a real big loop hole in alot of rural areas) but that doesn't mean the city will ever allow you to actually build on it. And if your like me and take things like water and electricity for granted - did ya know it can cost upwards of half a MILLION bucks to run main electrical and utility lines even a half of a mile into a undeveloped area. Another thing to watch out for is unexpectadly buying swamp land or ledge which can never be built on, lots of the time contacting the city wetlands department can verify if the property is located in a non buildable area- also a survey cant hurt if you are really wanting to build. Even though a lot maybe zoned residential- that doesnt mean that it can actually be built on ! And Keep in mind land is only worth what surrounds it. And theres no sayin when you might get a deal in a upcoming area...but again do your research before investing in a 'opportunity' because with a oppotunity to make money- you also have the opportunity to lose it.
-Like I said im sure theres things i missed in writing this quick....but there's one last though i want to leave you with- It is that if you wanted to buy a average house and wanted to borrow money from a bank to do so. There are alot of requirements that the bank would have before they are going to invest their money into you and the property, Its my opinion that if a bank investing their money into a peice of property is willing to take these steps- that a person willing to invest their money should do the same. Some of those requests would be ....
- a appraisal of the property to make sure it is properly valued.
- a title search and insurance just to make sure you are buying what you think you are buying.
- a attorney to represent yourself and do all the minor research that you may have missed, and see through any quirkey parts of the purchase.
And i would definately recommend following through with those steps if you are purchasing a home on ebay or any other internet advertisement. An appraisal runs around $300, title insurance around $500, and a attorney to check over contracts and legal documents is anywhere from $400 to $1000. It all depends on your situation, and the area of the US you are buying- but all estimates i gave you were high end. PS - google search these services- you can find them much cheaper online if you are willing to take a few minuted to gather the info yourself.!!