How to analyze an unlisted property?

Question

I've searched around a little and couldn't find an answer, so I figured I'd master my fear of looking dumb and just ask.

So I'm driving around a neighborhood I like and I see a house with a sign, "For Sale By Owner," and I think it looks interesting. Take a picture, get home, look up the address, find out it's not listed. I know that I can call the number on the sign and chat with the owner about why they're selling, find out if there are problems I can help them with, etc, but how do I find out more on my own as well? I'm super new to this, but I've heard/read about problems with the title, unpaid taxes, and all manner of other nasty surprises for the naive investor (that's me). If possible, I'd like to practice analyzing and evaluating homes while I'm still in my initial education phase and before I'm ready to actually pull the trigger on anything. Thanks for your time!

Nuhan Demirkan · Answer

Alex you don't need to worry about unpaid taxes, title issues, etc. Your offer to purchase will be contingent upon the seller bringing an insurable title to the settlement table. Don't waste time on that. That portion belongs to the title company (make sure you have a good one). If there are issues with the title you would renegotiate the buy price or walk away. Rather, you want to learn how to estimate the after repair value (ARV), cost of rehab, identifying the items that need to be repaired/updated and any other costs related to flipping or renting the property. That will get you to the buy price at a healthy profit or cash flow.

Aaron K. · Answer

In many counties you can visit the building department and submit a FOIL request for anything you want to know related to the property (violations, certificates of occupancy, back taxes, etc). Many times there is also an online parcel access that you can use to pull the tax files, which should also give you a bunch of info. You can also hire a realtor - just because the property is being sold by owner doesn't mean you can't use a realtor on your side (for a fee, of course). Sometimes it's easier to have a realtor pull alot of the necessary paperwork if you're just starting out and don't know exactly where to go.

Alex Gaw · Answer

@Gino Barbaro Thanks for the advice! I think overcoming my discomfort with calling strangers will be one of the most important things I do in the beginning.@Greg H. I really appreciate the offer--I'll definitely keep it in mind!

Greg H. · Answer

@Alex GawI wasn't soliciting business or asking for anything in return. Just looking to help a new investor out and give you my 2 minute valuation based on comps from the MLS . Although, I would prefer you not follow Gino's advice and have a long list of questions ! Just kidding

Gino Barbaro · Answer

@Alex GawHi AlexNow is the time to start calling brokers and trying to establish relationships and asking them questions. They are looking for investors also.I was fearful when I first started out, but I just bit the bullet and picked up the phone. You can always call brokers in different markets and practice speaking to them. Just make sure you pick a specific type of real estate strategy, such as buy and hold, or fix and flip.Try to draw up a list of questions that you want to ask, and follow it. Have the list on you in case a broker calls.You will be amazed at how quickly you will get the hang of talking to brokers.Good LuckGino

Alex Gaw · Answer

@Alex Vela and @Greg H. thanks for the feedback. I'm hesitant to bother an agent until I have an actual plan and am ready to start making offers. I just don't want to waste people's time, especially right now when there might not be much I can offer in return. I was hoping there was a way for me to get some practice evaluating potential deals while I continued my RE education and saved up some money.

Greg H. · Answer

In Texas, the only real way to find out the value and the ARV of a property is to get comps from and agent. Zillow and all the other sites are useless as we are a non-disclosure state. Tax records in Travis County are going to be closer than most counties but are still not accurate. Let me know if you need some help and I will do a quick analysis for you as I have MLS access

Alex Vela · Answer

@Alex Gaw - While not perfect, you should become familiar with Zillow and/or Redfin. They will give you an idea of the area without having to enlist an agent. There is nothing wrong with using an agent either. County tax assessor or commissioner website's are also a good place to look.

Alex Gaw · Answer

Thanks for the responses everybody! @Shane Woods thanks for the links!

Shane Woods · Answer

Hey @Alex Gaw! Here are some good Austin links for you:Austin ZoningAustin Zoning Quick ChartAustin Flood Plain - Use IE, NOT Chrome for this oneAustin White PagesTravis County Tax Site - Property SearchTravis County Tax Office - Account Search (This one is where you find out if they're past due or not)Good Luck!!!