1. Look for ex-grow op homes:
Whether these homes had an ex-grow op last year or 10 years ago, these homes often fetch below market value. No buyer would buy an ex-grow op home, when a similar home sells at the same price, hence, you can often use this stigma to negotiate the price below fair market value.
2. Court Ordered Sales/Foreclosures:
The reason these properties went into foreclosure is not important. The owner may have defaulted on the loans or it was an ex-grow op or whatever, these properties sell “as is, where is”. The lender who now has title over the property needs to sell it to hopefully recuperate its losses. They’ll offer no guarantee or warranty on the property, so it is all up to the buyer to do their due diligence. The appliances might not work, the property may have been gutted by the owner, buyers wishing to buy and live in the property should do a home inspection in these cases. Also, court ordered sales are a bit complicated, and just because your offer is accepted and you remove subjects, it doesn’t mean the property is yours, a court date has to be set up and a judge has to approve the sale at which point other buyers can come in and bid on the property as well. At first, the lender will hire a real estate agent to try to sell the property at market value, but if it doesn’t sell, they’ll reduce the price bit by bit until it receives an accepted offer and so investors can often get great deals on these properties as other buyers don’t understand, nor do they want to go through the hassle of purchasing a foreclosure. Contact your real estate professional to learn more about the process.
3. Homes on busy streets, T-zones or beside religious institutions:
Having a home on a busy street is convenient in terms of transit as bus stops are often not far away, but the noise is what makes these homes sell for below market value. How much of a discount depends on how busy the street is and how loud it gets. Buyers typically don’t like to buy homes on busy streets with lots of traffic because of the noise and is also the reason why they don’t like to buy homes beside religious institutions because of the traffic that goes in and out. They don’t like it when their streets are packed with cars and they can’t find a parking spot outside their own house. Homes that face another street or an alley like a T are properties that sell below market value. Asian superstition and feng shui classify this as bad luck and even non Asian buyers must be aware of this because when it comes time to resell the home, Asian buyers will typically stay away from these homes. Hence, these homes are often sold at below fair market value.
4. Irregular homes or homes on small lots:
Buyers like to buy homes that are pretty “standard”. Rectangular shaped or square shaped homes and typically don’t like pentagon or trapezoid or irregular lot homes. Just like how buyers like symmetry and design, homes on irregular shaped lots are not very attractive to typical buyers. If buyers want to tear down and build a new home, the design will be a little bit more difficult and the architect may have to be a bit creative to build a house on those lots and hence would charge more. The same goes with small lots. If the house is on a very small lot, there are limited options on what you can build on that lot based on city bylaws and hence it’ll deter many buyers. These often sell for below fair market value.
5. Flood plain, peat, close to commercial retail stores
If the location of the home is in a flood plain, or where peat soil is common, buyers are quite hesitant to pay fair market value for these homes. Buyers worry about sewer back ups, foundation issues and think that maintenance over the years will be very costly. However, buyers who do their due diligence will often find that these properties aren’t as costly as the hearsay makes it seem. Regardless, because of this perceived notion, buyers often don’t like to pay fair market value for these homes. Buyers also don’t like homes that are close to commercial retail stores or restaurants. They don’t like the stench of garbage in the alleys and the delivery trucks that go in and out of the area and so these homes often sell for below fair market value as well.