The 7 Worst Ways to Lose Big Money in Real Estate 🏠💸
Hey there, it’s Shawn The Realtor Guy from Portland, Oregon! 🎙️ My recent video on the “7 Best Ways to Lose Money in Real Estate” got a lot of love, and you asked for a deeper dive, so here’s a blog post with all the details! 😄 This post is all about avoiding costly mistakes to protect your hard-earned cash in real estate. Let’s jump in! 🚀
7. Over-Upgrading with Bad Taste
Spending big bucks on kitchen, bathroom, or landscaping upgrades right before selling? Big risk! For example, dropping $100,000 on a kitchen remodel might only get you 50-60% back in return on investment (ROI). 😱 Plus, quirky choices (like dark purple walls or odd designs) can turn buyers off.
Tip: If you plan to live in the house for 10+ years, upgrade to your heart’s content. But for selling, stick to neutral colors and simple designs. A new front door or exterior paint can yield over 170% ROI! 🚪
6. Selling Off-Market
Selling privately to a neighbor or friend often means getting less than market value. For a $700,000 house in Portland, you could lose $70,000 by going off-market. 😓 Worse, I’ve seen pros exploit this—like a $2M home bought for $200,000 a decade ago!
Tip: Always get a fair market value assessment from a trusted third-party realtor. Listing on the MLS (real estate system) exposes your property to more buyers, ensuring you get top dollar.
5. Buying Too High
Overpaying for new condos or homes near highways or commercial areas can lead to big losses. Portland’s John Ross condo (built in aroun 2004) sold for $300,000 but crashed to $120,000 during the 2008 crisis (based on my memory, so very approximately). 🏙️ Homes by busy roads can also lose 5-15% compared to quieter areas.
Tip: Check the surroundings (roads, commercial zones) carefully before buying. A good realtor’s market analysis can prevent overpaying. Opt for homes near green spaces to maintain value! 🌳
4. Selling to Cash Investors
Cash buyers (flippers or hedge funds) promising “quick sales, no repairs” often lowball you. They might buy a $500,000 home for $350,000 to pocket $100,000+ in profit. 😡
Tip: Before dealing with cash investors, consult a trusted realtor for a fair market value. Even if you need a fast sale, listing on the market can minimize losses.
3. Holding Too Long in a Declining Market
If a city’s industry or economy tanks, so can property values. Think Detroit when the auto industry left. In Portland, Intel’s recent 12% layoffs could signal risks. 🏭
Tip: Keep an eye on local industries, colleges, or commercial shifts. If decline looms, consider selling early or downsizing to cut losses.
2. Falling for Real Estate Scams
Hackers can hijack escrow accounts, stealing deposits like 10% ($50,000) of a $500,000 home. 😱 Scammers also impersonate owners to sell land—like a 50-acre lot worth $1.5M-$3M—without the real owner knowing.
Tip: Verify escrow account details directly with the company in person. Landowners should regularly check county records to ensure their property hasn’t been fraudulently sold or sign up for county alert systems.
1. Selling a Gold Mine Without Knowing
The biggest loss? Selling land with hidden treasures like gold, oil, or rare resources (e.g., ginseng:) for cheap. Imagine selling a 10-acre Oregon lot for $500,000 when it’s worth $500M due to a gold mine! 😳
Tip: Before selling large land, get a geological survey or expert consultation to check for valuable resources. Even realtors might miss this, so do your homework.
Wrapping Up
Avoid these 7 mistakes to save big in real estate! 😊 Work with a trusted realtor to know your fair market value and steer clear of scams or bad upgrades. I hope this helps you, your family, or friends protect your financial future. Got questions or success stories? Drop them in the comments! 🙌
Note: This post is based on the Shawn Realty Podcast. Always consult a professional for real estate decisions.
Shawn Realty 