What is a Fire Sale in Real Estate? It is a process where a property owner or a business entity who has sold their property for want of money decides to carry on the sale of the same property again in the real estate market with the objective to make a profit.
This is done by selling at a price lower than that prevailing in the market or in the locality. It is also known as ‘flashing’ or ‘burning off’.
Why is it called a fire sale in real estate market? Well, a fire sale basically happens when the price of a property, after being market tested goes down.
And the very first thing that happens is that the price of that particular property in the estate market drops to a level that is way below the prevailing prices in the locality and in the same spectrum of prices in the market. This sudden fall in the property prices is an automatic trigger for the process of a fire sale in real estate.
So, what can one do to avoid fire sales in real estate? A good step is to pre-qualify for a fire sale. You have to convince the estate agent or the manager to see your worthiness to purchase the said properties.
The fact that you are qualified for a certain property does not mean that you have to buy it. Remember, these deals are done on a case to case basis.
Some Fire Sale Facts That You Need to Know
Now that we have understood what fire sales in real estate are, let us take a look at how one should go about participating in these deals. The best and easiest way to go about participating in a fire sale is to make use of the services of an estate agent who is proficient and experienced with the deals.
Although you can find these agents online, it is best if you approach them personally. This makes them feel that you are sincere in your venture to find a fire sale property.
Another thing that you can do is to search the internet for some of the online advertisements of these deals. Read through the content and note down any details that appeal to you.
Once you have found a few advertisements that you like, do not make any offers immediately. Take time to think it over. If you are sure that you are up to the mark, then put up a counter offer that is better than the ones that were offered earlier. It is important to state that you will not be offered a final decision until you have agreed to the counter offer.
Since this is a real estate deal, you need to consider certain things. Remember, you will not get all the money that you had bargained for in a fire sale. You will most probably get a percentage of the amount that was paid by the seller.
This may not be much but it is still important to note that the sum you will receive will be much lesser than what you could have got from a normal sale. This is to ensure that you will be able to make good your investments after the fire sale.
Another thing to take note is that you are not required to stay at one place during your whole transaction. Even though it may not have been your intention, the fire sale may have caused you to transfer to another location temporarily. In this case, you need to be sure that you will find a buyer who will be paying you for your services for the entire duration of the sale.
Before closing the deal, make sure that you have checked out all the documents thoroughly. You need to know who will be liable for what should the situation arise. A fire sale should only be finalized after you have checked out all the legalities and all other requirements needed to be fulfilled. With this in mind, what is a fire sale in real estate will no longer seem to be such a burdensome task after all.