Q Do you have any tips on making an offer on a piece of property when you’re not sure if it’s for sale? The landlord is an absentee. I’d appreciate any advice on how to figure out the property’s worth before making an offer. — M.B., Monroe
A Some of the best buys in real estate come from making offers on property that is not actively being marketed "For Sale." You didn’t specify whether you were talking about raw land or a rental property, but the process is the same in either case: 1) Determine the market value of the property. 2) Locate the owner. 3) Make an offer (preferably below market value).
The easiest way to determine market value is to work with a friendly real estate agent who is willing to run comparable sales for you on the multiple listing service computer.
The agent can enter the specific property type and location and the computer will print out a list of recent sales of comparable properties in the area you are analyzing. If the agent works in the area where the property is located, he or she should be able to give you an accurate estimate of its true market value.
Agents also have access to property tax records, which will give you the name and address of the legal owner of the property.
Of course, real estate agents work on commission. Some agents are willing to provide free service as a means of building a long-term relationship. But if the property you are interested in buying is not listed for sale, the agent can’t earn a commission on your purchase, so you may have trouble finding a good agent willing to give you his or her time for free.
You might offer to pay the agent a fee for negotiating a deal with the property owner.
An alternative is to contact a local title insurance company and ask for a property profile.
For a nominal fee, the title company will give you the tax assessor’s information on the property which includes its assessed value, lot size, square-footage of the house, number of bathrooms and bedrooms, etc.
The structural information on the home isn’t always accurate, but at least it’s a place to start.
The Property Profile also includes a plat map showing the boundaries of the property, a copy of the last recorded title conveyance document (which may include the last sales price), and sales data for similar properties in the area. You tell the title company what parameters to use in searching for the comparables.
For example, if you are looking at a three-bedroom house on a one-acre lot you could ask for all recent sales of three-bedroom homes on one-acre lots within a two-mile radius of the property you are analyzing.
If you are familiar with computers and surfing the Internet, there is also a wealth of information that can be obtained online for free. You can find sites where you can search property tax records online, and most of the real estate multiple listing services offer searchable databases as well. Just do an Internet search for the real estate information for the county where the property is located.
Once you have established the market value of the property, you have to make contact with the owner. Mail a letter to the owner’s address shown on the property tax records, or use the name and address to look up the owner’s phone number.
If it’s a rental property, ask the tenants how to contact the owner. The farther the owner lives away from the property, the better the deal you are likely to make. Out-of-state landlords are particularly good candidates for "low-ball" offers.
Managing a rental property from long distance is a hassle, and if they have been out of the area for many years, they may not realize how much property values have appreciated.
Have a figure in mind before you contact the owner, but before you name your price, ask, "How much do you want for the property?" Or, "What’s the least you’d be willing to take for the property?" The answer might surprise you. There’s an old saying in real estate negotiations: "The first person to name a number loses." So try to make the seller go first.
If it turns out that the owner is well aware of the property’s true market value, it’s not a lost cause. It just means that you won’t get a "steal of a deal." And by doing your homework ahead of time with the aid of a real estate agent or title company or the Internet, you’ll also ensure that you aren’t overpaying for the property.
Mail your real estate questions to Steve Tytler, The Herald, P.O. Box 930, Everett, WA 98206. Fax questions to Tytler at 425-339-3435, or e-mail him at economy@heraldnet.com
Steve Tytler is a licensed real estate broker and owner of Best Mortgage, Inc. You can visit the Best Mortage Web site at www.bestmortgage.com.
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