I found myself checking out the Knoxville MLS on Saturday when I stumbled across what appeared to be the deal of the century.

A 2800 square foot home that is only 7 years old on the market for $122,000.  The kicker was that the mortgage note on the property is for a staggering $355,000!  The asking price is close to just 30% of what is owed…you have got to be kidding me!

Was this the gold mine deal that I have been looking for?

Of course my thought was that if you have $80,000 in repairs and holding costs, who cares.  Put the property on the market for $300,000 and you still stand to make a cool $100K!

Not so fast my friend!

Upon further examination of comps and research about the area, it appears that the home is priced a little bit below market value…but not much.   I found two homes on the same street that are on the market.  One for a little over $100,000 and the other for just under $150,000.  The cheaper home being built in the 70,s and the more expensive home built around the same time as my subject home.  Upon further research I have concluded that the property in question might sell for ~$180,000…but that is probably tops

I have no idea how the property deserved a mortgage for $350,000, but I am pretty positive they made a huge mistake.  I have some theories about how this could happen, but the whole point of writing this is to say that you cannot take the numbers on a property for face value.

What I mean is that you must always do your due diligence and research.  You can bet that I went and did my research the moment I stumbled across this property.  And boy am I glad that I researched the property because I was ready to jump all over the deal and make a full asking price offer with no contingencies.

Lesson: Do Your Research Before Making Any Offers!

Ross Treakle