The GoodPlace Guide To Hunting Undervalued Properties

By the GoodPlace.my Editorial Team

Copyright GoodPlace.my. All rights reserved. Do not copy or distribute without permission.

The GoodPlace Guide To Hunting Undervalued Properties

Note:

This is a continuation from the Part 1 of the

GoodPlace.my Homebuyer Guide Series on How To Value A Property. If you have missed that report, go back to the download page (link is in your Welcome email), and if you have not signed up yet, click here.

oldie immediately got a hold of her pen, and went over her notes quickly. Uncle Patrick pondered over Goldies question, and finally said, So. You want to know where and how to find these super-motivated sellers who will sell less than the fair market value, am I right? Yes! WellIve always assumed that property sellers would only have the highest possible selling price in mind Ha! Uncle Patrick interjected. Then you assume wrong! Havent you heard of that saying.. when you assume, you make an.. nevermind! Of course you know where Im getting at, Uncle Patrick exclaimed. The two laughed before Uncle Patrick continued.

Taking It All Back

Well there are a lot of factors. For one, theres always repossession. Repossession like when people fail to keep up with house payments and they get kicked out of their own homes? Goldie replied. You make it sound so simple, I like it. But you are actually correct. I watch a lot of movies, Uncle. Besides divorce, another typical climax in a Hollywood film is a familys house being repossessed. Then theres where the crying starts. I guess its easy to figure out. Goldie said, as-a-matter-of-factly.
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Uncle Patrick chuckled. Okay, youre right on point with everything. But on a serious note, my dear Goldierepossession is a scary thing. Its not only happening in Hollywoodits happening in real life, everywhere and all the time here in Malaysia. Now, when a homeowners house gets repossessed, a lot of problems will follow for sure. Example? Goldie inquired. Example number one. Very very bad credit score. Meaning, no more chances of getting help being funded when buying another property, or another house loan, or any type of Look for sellers who loan, explained Uncle Patrick. Ouch, said Goldie.

Ouch indeed. Then, more often than notthese people whose houses are put up for repossession are already drowning in debt. If their house gets repossessed, imagine the horrorsno money in the ATM, no house to live in, no food to eat... well probably theyd have something to eatif you live in the US, where they have food stamps Food stamps! Thats really depressing, said Goldie, along with a sigh. True. Very Hollywood-like, like you mentioned. The embarrassment is too hard to bear, even to imagine. So. These people, what they do is sell their houses below the fair market value even before it gets repossessed. They may not be able to get the entire market value from their property, but think of thisat least with the money they get from selling their houses at a lower price, theyd be able to pay off their existing debtswhich I assume are all at risk of gaining lucrative interest rates. Goldie thought a moment, and said, Well, at least with the money theyll be getting, theyll be able to start again. Or find a place to rent that fits their budget.

want to unload their properties before they get repossessed.

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Right. Everyone deserves a moment to start again, so I agree with you on that one 100%, smiled Uncle Patrick. Goldie remembered seeing notice boards on the way to Uncle Patricks swanky bungalow on Bukit Tunku. This reminds me of those notices that people put up which advertise services where property gets exchanged for cash. Uncle Patrick nodded. Yes, I bet youve seen those on your way here! Those are middle men who typically target desperate sellers in trouble and try to get their property at bargain bin prices. Okay. Repossession counts as one. What are the other factors, Uncle Patrick?

Personal Troubles

here are a couple more. Sometimes, sellers would sell their houses below their fair market value because of personal preferences coming out from personal events. Want to take a shot in guessing what one would be? Uncle Patrick asked. Lets see... a-ha! How about divorce?!exclaimed Goldie, obviously excited. Haha! You, my dearhave been watching a lot of those Hollywood films. But then again, you are always correct! Very good! replied Uncle Patrick, with a hearty laugh. Uncle Patrick continued. For recently-divorced couples, sometimes splitting the money that is going to be made by the selling of their previous house would take a hell lot of inconvenience on both ends.

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Not everyone can stand the company and the sight of their exes, especially when meetings had to be done, lawyers to see, papers to be signedso what they do is just sell their There are sellers who house at a much lower price to attract buyers just want to sell their and get a move on with houses quickly because their lives. WellHollywood has told me that the majority of couples have a 30% rate of getting back together, so selling their houses at a lower price probably is always not a good idea?! Thats still money, Uncle Patrick! sai d Goldie. I dont know where Hollywood gets those numbers, but thats something I cant explain. Like I said, its a personal choice. Its mostly a preference that resulted from something rooted deeply in their personal lives. I am not a couples therapist, nor a psychologistjust a real estate genius. Forgive me if I cannot answer your question, said Uncle Patrick with a light chuckle. Haha! Im just thinking out loud! Alright, Uncle P. Point taken. So my list is growing. Do I have anything else to add to that?

of personal issues, like a divorce.

That Need For Lifes Simple Pleasures

ust a few more. In addition to personal preferences, sometimes people who are hitting their early 60s would prefer to sell their previous houses at a lower price. The need to move out and move in to something simpler, say, something more peaceful and quiet, or basicallysmaller, becomes something retirees consider. Got that one, replied Goldie. Selling their previous homes below the fair market value is actually convenient. Who needs a big house when all your kids are living their own lives? WaitI

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The GoodPlace Guide To Hunting Undervalued Properties

think you are an exception, said Goldie, while looking around Uncle Patricks cosy and large living room. Welllets just say the bigger, the better. More relaxing. I dont know, Goldie. The thought hasnt hit me yet. Probably soon. Id move out and buy a smaller house. In Puchong, maybe, so its easy for me to bug you for a cup of sugar that I forgot to buy at Tesco because I am really ageing and getting forgetful. You are funny, Uncle! You are a funny, young-at-heart-old man, living in a big house! You forgot to add real estate genius on that one, my dear, laughed Uncle Patrick.

Uncle Patricks cat, Shadow, suddenly came out of nowhere. She rubbed her face on Uncle Patricks toes, signalling him to get up and get her food in the kitchen. Goldie scanned her notes quickly, then a question struck her as Uncle Patrick came back and sat down on his chair.

Look for sellers who value convenience and ease of transaction above price. Like senior citizens.

Undesirable Properties
Uncle, how about those properties that dont looktoo good? Or have a history? Do you get what Im saying? inquired Goldie. Ah, yes. Good thing you brought that one up. Of course, not all houses or condominiums look as amazing like The Troika! Also, sometimes these properties havent been maintained for the longest timemeaning a whole lot of repairs for the next owner, meaning more problems and inconvenience.
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I guess its fair enough to say that these houses would be sold at a relatively lower price, explained Uncle Patrick. Hmm, but are there lots of those around? I mean, I do see abandoned properties from time to time especially when I am back at my hometown. I would be hard pressed to find any in KL, I mean. Uncle Patrick smiled. Youre right. These are obviously hard to find, but if its easy to find undervalued properties then everyone would be doing it and those properties wont be undervalued! Kind of a Catch-22 situation there, I know. But if you put in the effort to look then youll be amply rewarded, thats for sure. Goldie nodded.

The Game Of Business

ow lets shift gears a little and talk business. Businesses are prone to downturns. If businesses reinvest their profits into residential properties and at some point the company faces cash flow problems, what they do is they put out that residential property for sale, and sell it below its fair market value, explains Uncle Patrick. Goldie took a moment to take a sip of her Earl Grey. Well, in tough economic times, I guess this is probably the last-ditch effort of some businesses to save their behinds instead Look for businesses in of putting their businesses at risk! trouble with properties Uncle Patrick agreed. on fire sale. During the boom years, you will see companies dipping their toes into the property development business, so diversifying into property is not a new thing. A lot of businesses do this, Goldieeven respectable and profitable ones. Its a gamethe economy, that isyou never know where the ball is about to head next.
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I know, Uncle. Youre correct on that one. So... I have in here in my notes Repossession, personal troubles, personal preferences, business cash flow issues got it.

But Dear Motivated Seller Where Art Thou?

Goldie changed seats, choosing Uncle Patricks leather easy chair over the couch. She kicked her flats, raised her feet to the table, making Uncle Patrick smile. Seems like youve made yourself comfortable, Goldie. Its a beautiful sight, observed Uncle Patrick. Goldie smiled. Well, Uncle P. I am learning a lot from you. I never thought Id enjoy talking about real estate this way! Every question I have is all answered rather brilliantly! Thank you, replied Uncle Patrick. He cleared his throat before continuing. Hang on a moment, Goldie. Youre forgetting the most important question. Goldie laughed before realising that she still hasnt asked Uncle Patrick where to find these motivated sellers Find a good agent to who would sell houses help you. below their fair market value. But of course! Where is my head!? I guess I got too excited. Or probably you put something in my Earl Grey when you returned from the kitchen?! I assure you, no. But will consider putting Red Bull in it if you keep on forgetting things, laughed Uncle Patrick. I am so sorry! Okay, Uncle Patrick. The floor is yours. Where do I find these uber-motivated sellers?

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The GoodPlace Guide To Hunting Undervalued Properties

The Agent Is Your New Best Friend

So, let me ask you a question, Goldie, Uncle Patrick said. Goldie sat up straight. Sure, Uncle. Now, when you first thought of buying a housewhat did you first do? Hmm. Well, first I Googled the few locations that I had in mind to research and read property reviews. Then, when I have zeroed in the property I wanted, I asked around for property agents who could help me out with what Im looking for. I also posted on my Facebook wall to ask my friends. Its the agents job, of course, to help me get that house for me, right? Uncle Patrick smiled. Right. Its their job to make lives easy for investors and homebuyers like yourself. Howeverif you are planning on becoming a full-time property investor, do you know what would make things even easier? Establish trust and Tell me, Uncle! Goldie exclaimed.

Uncle Patrick continued. Well, the first thing you want to do is to make a property agent COME to you. Not the other way around. Its a role-reversal, so to speak. The agent would come to you if he knows a property that is selling below its fair market value. That pretty much makes things easy on your endeffortless, if I may add. But how will I make them come to me? I mean, I cant just barge into their offices and say Heres my number, so call me if you know a house thats selling below its fair market value, maybe?! Hahaha! If it was that simple and less-chaotic then a lot of people would have done that already. But its not that simple.

build relationships with an agent who will bring you the deals.

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Most of the time people who would do that strategy will have their faces stuck in mud, nothing else. Agents consider them as a waste of time, so its best not to do some barging in the near future. Or better, never, Uncle Patrick laughed. Of course, Uncle Patrick! I was only kidding. But seriously. I know a lot of it depends on negotiation, an open communication, and trust in order to build a relationship with these real estate agents. I guess its a little harder than it sounds. Trust is always a huge factor. Of course, you have to demonstrate professionalism each time you deal with estate agents, so you look credible and serious enough in order for the deal to push through. How does one do that, Uncle? asked Goldie. Honestly? Agents would prefer to work with someone who is modest. Not the barging type, like you suggested. Uncle Patrick laughed out loud, in between sips of his Earl Asking the right Grey. Now. You need to make them feel that you are a serious investorthat you are capable of your word, and that you are serious enough to consider all the options, the risks, and everything that may be involved in investing on a property that is selling below its fair market value. Go on, Goldie replied. For onehaving show money is truly important. I know it sounds very materialistic but its only businessmost real estate agents would act accordingly whenever money is thrown in the equation. That makes a lot of sense. Its business, after all. Uncle Patrick nodded his head. Right on point. Also, real estate agents would appreciate it if you would act promptly on decisions that need to be made. This gives out an air of professionalism on your end, making them want to trust you. Its just the first step in getting the trust of these real estate agents.
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questions will legitimize your stand as a serious investor.

The GoodPlace Guide To Hunting Undervalued Properties

First step? I thought that was the last! But go on, Uncle Patrick. I have your attention. So the next step would be asking the right questions in order to create a relationship with a real estate agent, and eventually let them tell you which properties are selling at lower prices. When a relationship is built, its always easy for investors to get calls from real estate agents to let them know which property is selling at what price, or which property is selling on the market that is below its fair market value. Its like you being a VIP, and your mobile number is always number 1 on the agents speed call list. I am ready to list down all these questions that should be asked, Uncle! said Goldie while flipping her notebook.

Patricks Three Golden Questions

lright! First question would always have to be: Do you have any property that youve been marketing for a long time? stated Uncle Patrick.

Ah. So youre saying that the longer a property is listed on the market, the higher the possibility that a seller would be willing to sell it at a lower price, below its fair market value? asked Goldie. Not always. But the possibilities are high. Ive been in the real estate game for so long to know that most of the time, these sellers would be really, really motivated to sell property at a much lower price. Goldie scribbled all the information down hard. She needed a moment to pick up another pen from inside her bag, as her current one has stopped responding. She wrote, finally:
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Uncle Patricks Golden Questions: One: Do you have any property that youve been trying to sell for a long time?
Uncle Patrick peered over Goldies shoulder. He glanced at her notes, asked Goldie if he can borrow it, and with Goldies permission, he wrote and added:

Two: Do you have any hyperactive sellers? Three: Do you have any multi-agent properties?
He then gave Goldie her notebook back. Goldie examined her notes. Your handwriting is far from legible, Uncle Patrick. Its a good thing that these three ones are all almost self-explanatory because I would need a magnifying glass if youve decided to explain everything in writing. Uncle Patrick laughed out loud, surprising Shadow, who was sleeping peacefully at his feet. Good thing youre a fast learner. What exactly is a hyperactive seller, Uncle? Well, ask the agent if theres any seller who is particularly annoying! You know, the type who calls the agent ten minutes past midnight to see if there are new leads. If this is not a sign of desperation, God knows what is.

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Goldie chuckled. properties?

Alright,

noted.

How about

multi-agent

Uncle Patrick explained, Its what it says on the can. Those are simply properties which are marketed by multiple agents, or even by multiple real estate agencies. Again, thats a sign of hyper motivation or even desperation. Makes sense, Uncle.

Lets Kick It Old School

ne thing Ive noticed about your generation, Goldieis that you tend to depend on the Internet too muchfar too much, in my opinion.

Well Uncle Patrick. My generation would not know what to do without Google or Facebook. Its a shame, really. Why? What are you getting at? Goldie wanted to know. Because sometimeswell most of the timeproperties that are selling below its fair market value are advertised in the local paper. Ive to say that I havent been paying attention to The Star for the past couple of months now, Uncle Patrick. I get most of my news on-the-fly either through online news sites, You are more likely to Facebook or Twitter. I know. Newspapers may be a dying breed properties in when it comes to news, newspapers than at ironically. However, its still a force to be online portals. reckoned with when it comes to classifieds especially in this part of the world. While theres continued migration from offline to the online world, you will find that typically there are more undervalued properties advertised in the newspapers than online.

find undervalued

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The GoodPlace Guide To Hunting Undervalued Properties

And get this. Newspapers are just the beginning. I havent even mentioned postcards and leaflets yet! Really? Postcards and leaflets? Wow, I didnt know that! Goldie answered. Well, now you know that Mr. Internet isnt really Mr. All-That, Uncle Patrick smiled. Hahaha. You have that one thought summarised pretty well, said Goldie.

Sourcing Leads From Other Buyers

inally, theres also that option of buying leads from other investors. Meaning, you can get some information on these properties that are selling below their fair market value if you have extra ringgit to spare to pay for their finders fee, explained Uncle Patrick. Ah! That sounds really easy! But the problem with that is not everyone has that extra ringgit! However, that will make out things very, very easy. I wish I had that extra ringgit, Uncle Patrick. Dont worry. You will! You can also source I trust that. And when you do and decide on leads directly from buying a lead from an other buyers if you investor, all you have to do is go to the have got the cash to internet and do a little research. This is where spare. Mr. Internet becomes Mr. All-That once again, because its easy, quicker, and more convenient.

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Noted, Uncle. What are the places where I can perhaps get leads for a fee? Uncle Patrick smiled. Well, there are certain websites which I can get leads based on location. For example, KLCCcondominiums.my is a specialized site on KLCC properties. You can find potential buyers at that site from all over the world, not only Malaysia. Got it! Also, dont discount good, old-fashioned networking. The more people you know, the more information you can scrape. Sharing deals is a common activity among investors who have developed relationships with their peers, so just find the right person to help you out and stick with him or her, and expect that avenue of information to come alive right before your eyes, replied Uncle Patrick.

Learning & Putting Everything Into Action

oldie closed her notebook and stretched. That was a whole lot of information I can definitely use! Thank you, Uncle Patrick, she said.

Hahaha! I never thought youd be this interested in real estate as much as I am! You learn quick and asked the right questions. I hope you get to apply them some time soon. Ill try my best. I would be professional, ethical, balance between Mr All-That Internet and the old-school, and just basically allow these real estate agents come to me by building trust that will lead to a long, satisfying relationship. Am I right, Uncle? Uncle Patrick raised his hand for a high-five. Goldie laughed, and returned it back. Thats why youre my favourite nephew. Youre on your way in becoming the second-best real estate genius on this side of town. Second? Whos the first, then?! asked Goldie. Wellyours truly. Come on now. You would give me that one credit, right? answered Uncle Patrick with a laugh.

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Of course, Uncle, Goldie replied, smiling. Of course.

In Summary
1. Look for sellers who want to unload their properties before they get repossessed. 2. Understand that there are sellers who value quick cash and convenience more than the price. 3. Sellers with personal issues (like impending divorces) may agree to sell at price lower than the market value. 4. Businesses with cash flow problems tend to offload properties at fire sale prices. 5. Getting the help from a good agent is a must. Know what to ask an agent when you hunt for undervalued properties:a. Look for properties which have been marketed for a long time. b. Ask for hyper-active sellers. c. Ask for multi-agent properties.

n the next episode of Goldie & Patrick, we explore one of the hidden aspects of property investment simple methods to maximize cash flow from a property purchase.

We will share some little-known tricks on how to make investments generate immediate cash in order to make your property empire grow. If you are looking to scale up your portfolio then you will find this report valuable. We are currently putting the finishing touches on the report, but you can get early access by leaving us a message on this page:-

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