Taking the House: Tips From Jason Cohen on Winning a Real Estate Bidding War

Selling a home is an emotional decision, and sometimes money isn’t the deciding factor in which offer a buyer chooses. Think of it this way – would you prefer to sell to a buyer who offers a few thousand more and wants you to pack up your life in a day, or to his competitor, who offers less, but will give you a few weeks to say your goodbyes? Real estate is predominantly a seller’s market. Jason Cohen has found that in Pittsburgh, Pennsylvania and beyond, it’s become increasingly important for buyers to appeal to both the homeowner’s emotional and financial sensibilities. Prospective buyers need to strategize; they need to make the sellers like them more than their competition.

Be diligent

There are few qualities more off-putting than disorganization. Make a good impression by having your paperwork in order and showing the buyer that you understand the financial implications of the agreement. Prepare documentation that proves that you can afford the cost of closing, and have your mortgage papers, loan documents, and proof of credit ready for the seller’s inspection.

Cut out contingencies

Try not to irritate the seller by adding too many demands to your bid. You may want those cosmetic repairs on the porch finished by the time you move in, but the hassle involved might push the seller towards a lower and less demanding offer. Ask for the inspections and repairs you absolutely need, and no more. Try to be as flexible as possible and make the process less stressful for the seller; they will appreciate your thoughtfulness and think better of your bid.

Enter an escalation clause into your bid

Adding an escalation clause to your offer shows the seller that you intend to seriously participate if the sale comes to a bidding war. Essentially, the clause states that if other buyers drive the price over your initial bid, you will top their offer up to a certain amount. Escalation clauses can help convince sellers that choosing your offer makes financial sense; that said, you need to know your limits. Walk away if the escalation pushes the price beyond what you can afford.

Be sentimental

Appeal to the seller’s emotional side. Include a personal letter with your offer packet that details why purchasing their house matters to you. Build a personal case for why the seller should choose you over other, possibly more lucrative, offers. Money isn’t always the deciding factor in a sell – so be compelling, and convince the seller to like you!

Jason Cohen of Jason Cohen Pittsburgh can provide further guidance on any of the above items. Visit our website at jasoncohenpittsburgh.com for further details.

*Originally posted on JasonCohenPittsburgh.org

Advertisements

The Value of Research: A Pittsburgh Case Study

Jason Cohen was only two years out of college when he bought his first property in Pittsburgh. It wasn’t a luxurious place by any means, but it was what he could afford with the means left to him after student loans. He sunk what resources he had into performing the most necessary repairs and managed to breathe new life into the struggling building. Its value soared; newly determined after his success, Cohen set his eyes on the next project and invested his profits. After ten years of hard work, Jason owns commercial and residential properties throughout Pittsburgh. He began with limited means, but Jason now has the resources and experience to run multi-million dollar community projects.

His secret?  Research.

According to Cohen, who facilitates the real estate investment forum Jason Cohen Pittsburgh in his free time, research is the factor that makes or breaks a real estate venture. An enormous amount of pre-planning goes into rehabilitating a property for sale, and the success of the venture hinges on having reasonable profit and cost projections.

More and more investors are flocking to house flipping to make a profit; according to statistics provided by Trulia, a full 6% of homes bought in 2016 had been renovated for sale. However, the field does pose significant risks if investors have little experience. If you intend to break into the real estate industry as Jason Cohen did, please consider the following basic tips for real estate research.

Look into the expense of the house.

Houses cost money. Repairs cost money. As Mindy Jenson, community manager for Bigger Pockets commented for a U.S. News article: “Nobody is going to hand you a house for free, and you can’t go to Home Depot and [get] your supplies for free […] If you are using credit cards and have no money, you can get into trouble quickly.” Assess whether the house will require expensive repairs, and compare your expense projections to your budget. Sometimes, it’s best to be patient and move on from a house with too many liabilities in search for one that poses less of a risk.

Research the neighborhood.

Find out how much you’ll need to pay to renovate the house for sale, then assess how much you’ll likely get for it based on neighborhood averages. Remember, you can’t tack on an extra $10,000 to the price simply because you owe that much to your lenders. Figure out if you can afford to buy and renovate the home, then act accordingly.

Research lenders.

Financing a house is notoriously expensive. Spend time going over your borrowing options, and choose one that suits your needs. Don’t move forward with the first place you visit; take the time to check out all of your lending options and proceed as seems best.

*Originally posted on JasonCohenPittsburgh.org

Jason Cohen Pittsburgh Presents – How to Revitalize a Property Without Breaking the Bank

The house at the far end of the boulevard looks like a place neighborhood kids dare each other to sneak into after dark. With peeling paint and gutters that seem to wilt off the house, it’s an unattractive buy at best. But buy it you did – and you know that it has far more potential than its creaky porch would suggest. The walls may need repainting, and the carpets replacing, but that work won’t take long. You’ve watched every episode of House Hunters; you know how house flipping works.

 

But as your time and money drain away, you begin to wonder, uneasy: Did you make an enormous miscalculation?

 

Renovating houses for sale is all the rage on reality television. Dirt-cheap fixer-uppers turn with seeming ease into beautifully expensive homes on-screen, and audiences wonder if they can turn the same profit as their favorite on-screen stars. Unfortunately, the numbers are against aspiring home-flippers. When Jason Cohen of Jason Cohen Pittsburgh strategizes, he always reminds his advisees that 12% of flipped homes sell at a breakeven or loss price even before calculating for expenses.

 

There’s no getting around it: renovating houses for sale is an expensive and risky venture for those with limited experience. However, Jason Cohen believes that if you are determined to give the investment your best effort, you should consider the following to make the most of your budget.

 

Estimate your expenses before the initial buy

Odds are, the house described at the top of this post wasn’t a lucrative investment. For all the buyer knows, those creaky floors don’t just need a new carpet – they need floorboards and rugs to boot. The curling wallpaper dismissed as a cosmetic fix could, when pulled back, conceal years of structural water damage. All told, the cost of rehabilitating the house added to the initial expense of the house could far outweigh any profit the investor makes after the sale.

 

Be thoughtful! Inspect the house and make a note of any repairs that need to be finished before the sale. Then, consider the market. How much do houses in the area sell for? Can you expect to reach that number? Pricing out your expected costs against your expected gains before buying will help you make an informed decision and prevent enormous financial miscalculations like the one outlined above.

 

Prioritize your repairs.

The unfashionable wall molding in the bedroom might need replacing, but the broken floorboard in the living room takes priority. Resolve the repairs that need to be completed to provide future owners with a livable space; then, if you have the money and time for it, resolve any remaining cosmetic issues. Hopping from problem to problem without any sense of order will waste your valuable time and resources.

 

Find a reliable contractor.

Make sure that you put in the time to check out potential contractors. It may seem a small step at the time, but it saves you considerable time and money down the road. Think of it this way: If you hire a hack contractor and end up firing him for poor work, you’ll need to hire a new contractor to both finish the job and clean up the mess his predecessor made. Save time and money by finding a competent contractor.

 

However, if you happen to be handy with power tools and know how to perform basic fixes well, you should invest the time in doing the work you can complete independently. Taking on a portion of the work yourself will lessen the burden of contractor costs and make your venture more financially feasible.

 

For more information and further advice, reach out to Jason Cohen directly at JasonCohenPittsburgh.com.

 

*Originally posted on JasonCohenPittsburgh.net

Do You Know How to Spot a Shady Contractor?

The first building Jason Cohen bought in Pittsburgh wasn’t particularly luxurious – but to Jason, it had potential. He knew that he could refurbish and turn a profit on it if he sank funds into a remodel, but he had neither the time nor skills to complete the repairs it required by himself. Cohen needed a contractor he could trust to do the job well on-schedule, and within the tight budget that he could afford.

However, the hiring process wasn’t as simple as finding and signing the cheapest contractor to come along; Jason knew that many homeowners in his position fall into contracting traps when they entrust the remodel of their property to underqualified or shady contractors. Luckily, Cohen found a competent and fair contractor to work with, and that initial project went well. With over a decade of experience under his belt, Cohen continues to hire contractors in

Pittsburgh and elsewhere to improve his properties – and watches for the same red flags that he steered clear of in his early years. Those warning signs are listed below.

Can’t provide proof of permits and insurance

Never work with a contractor who can’t show you their permits, licenses, and insurance papers. Each state has different regulations regarding the licenses contractors should have before beginning work on a project; make sure your applicants meet all of the proper requirements before you hire!

Asks to work without a contract.

If they don’t sign a contract, they don’t get the job. Never trust a contractor who offers to take on the remodel with only an informal verbal agreement; without the proper documentation, they can exit the job at any time and leave you with no money and a half-finished project. For advice on what to put in a contract, check out HomeLogic’s post on Contract Basics.

Offers to work at an unreasonably low rate.

Don’t trust a lowball offer, especially if the contractor asks to be paid upfront or in cash. Some shady operators will lead with a low initial cost, then demand more money from the homeowner later, citing a budgetary miscalculation. Don’t be fooled by contractor scams – go with someone who offers quality work at a reasonable price.

Lacks the proper equipment.

Avoid hacks! Make sure that your applicants have the proper equipment to complete the job at hand. A lack of necessary equipment indicates a lack of experience and skill, and hiring an under-qualified contractor will cost you in time and money. If you’re unsure of a contractor’s competency, reach out to their references! They might provide you with insight into the types of jobs that your applicant has worked before, and whether the contractor is right for your project.   

Acts standoffish or disrespectful

Your remodel is important to you, and any contractor should be aware of its value. Find someone that you can work well with; someone you trust to listen to what you need from the project. Odds are, you’ll be working with this person for weeks or months – so don’t go with someone who brushes away your concerns, skips meetings, or acts rudely!

*Originally posted on JasonCohenPittsburgh.com