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Is the Buyer’s Market Back? How to Find Deals and Steals on the MLS

The BiggerPockets Podcast
46 min read
Is the Buyer’s Market Back? How to Find Deals and Steals on the MLS

Let’s be honest. The housing market has been a pain over the past few years. Sellers wouldn’t entertain any offer that wasn’t 10% over the listing price, real estate agents wouldn’t return your calls, and you may have thought that the time to buy rental properties was over. Fortunately, the tides have turned, and the seller’s market has almost overnight become a buyer’s market. Price drops are aplenty on the MLS, real estate agents want to be your best friend, and sellers desperately need to get their homes offloaded. This creates an opportunity for you to start buying deals at a discount.

Jamil Damji, America’s leading wholesaler, knows that now is the time to get properties under contract. He’s been an expert at off-market deal-finding for decades, but now, he says that on-market deals are becoming far easier to find. Combine his nationwide knowledge with David Greene’s agent expertise, and you have a masterclass on finding steals, not just deals, in today’s housing market.

David and Jamil go through eight different techniques you can use to find deals, lock them in at a low price, and grow your real estate portfolio, while everyone else is too scared to act. In times like these, when fear is at an all-time high, smart investors keep their cool, continue buying based on the numbers, and walk away far richer than the average investor. Interested in doing the same? Grab your notepad and write down these eight techniques. There’s a good chance you’ll be using them soon!

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Listen to the Podcast Here

Read the Transcript Here

David:
This is the BiggerPockets Podcast, show 678.

Jamil:
Now is the time for you to talk to your real estate agent about pitching creative options to their sellers, right? Maybe this is just the right time where you can go get a seller finance or a seller carryback, a subject to. These are the conversations that we can start having when there’s motivation and not a lot of equity to deal with.
So, I think that all of the things that we talked about today were fantastic and they opened the door to even more creative opportunities.

David:
What’s going on everyone? This is David Greene, your host of the BiggerPockets for Real Estate podcast, here today with a special episode where we talk about, on versus off market opportunities and what strategies work in both.
I’m joined today by my co-host, Jamil Damji, joining me live from San Diego.
Jamil, what’s going on?

Jamil:
Man, I’m just enjoying the market, enjoying San Diego, and all the deals out there, just sitting on the market ready for me to grab them.

David:
Right for the picking. That’s exactly right. And in today’s show, we share some very tactical strategies that anyone can implement, to get the best deal possible, while the market is in a place where it’s actually favorable for buyers to do so, finally.
Before we get into that, today’s quick tip is, real estate is relationship business and now more so than ever. Really focus on building relationships with the right people. Jamil talks in today’s show about how he gets deals before they hit the market. Realtors literally bring it to him and he gets to write an offer before it even goes on the MLS, and he even wholesales deals like this.
BiggerPockets wants to help you do this. There’s lots of agents like me that are on the agent finder. You can use the BiggerPockets agent finder to be connected to an agent in your area, or reach out to me or Jamil, if we happen to be in the area that you are for recommendations of agents that we like, we found through BiggerPockets.
All right, Jamil, any last words before we get into the show?

Jamil:
I’m excited to get these techniques out there so that people can get out there, take action and get some business.

David:
Now, last week you and I had a very interesting interview with Taylor Wing, who is a young man who’s crushing it, finding off market deals, and it’s not that uncommon to hear about off market. In fact, it’s sort of been the talk of the town for the last couple years. Off market has been idolized. If you just said, “I have an off market deal,” immediately people were like, “Ooh, tell me more. It was the pocket listing, right?”
Off market was just, yes, that was the coveted thing that every… It was Pearl Jam tickets in the nineties. Everybody wanted it. It was very hard to get. But the market has shifted, and as someone who has their finger on the pulse of the markets, I think that you and I are pretty well qualified to talk about this because we both purchase off market and on market and then we also make our livings from on market dealings. So tell me, Jamil, what have you been noticing in the last couple months that’s changed regarding the on market/off market dynamic?

Jamil:
Well, oddly enough, I think that it has reversed in with respect to how good of a deal you can actually get. Here’s what I mean.
When you’re talking to a homeowner, going direct to seller, and you are trying to explain to them how the market has shifted, that prices have dramatically corrected in certain markets, I think that it’s a much more difficult conversation to have with people, where their entire life isn’t dedicated to real estate.
Imagine this, you live in a neighborhood, a nice subdivision. The guy across the road has a model match to the house that you have. They completed a nice renovation and they sold at say, $500,000 in March of this year.
Now, we know March of this year was a very, very interesting time because the competition for housing was insane. Everything got bit up, sometimes 50, 60 or a hundred thousand dollars over what I think the house was really worth. That emotional equity comes into play. And what I think is happening now is sellers still haven’t come to terms that things have shifted, massively.
So what I’ve been seeing is that if you engage with a real estate agent, or if you go online and go to the MLS and look for opportunities that might have been sitting for some time or houses that might be listed at a higher price but are still in original condition. You know those listings I’m talking about, where the agent is literally basing their price expectation, or the seller is basing their price expectation, with respect to something that had sold in the same subdivision but was fully remodeled. Those houses exist all the time.
I think right now you are finding some incredible opportunities, having real conversations with realtors because they see it. Their phones have stopped ringing. Everything that we’re experiencing in the market, they’re experiencing in the market as well. And so it gives you that layer of relatability, and I think that if you can have that advocate that is speaking sense to your seller, you’ll do better.

David:
Yeah, we can dissect that a little bit. Let’s think about why the dynamic has changed. So when you would go off market, and I would even add this. Off market used to be valuable because you weren’t competing with other buyers. That was the main value is, theoretically it was you and the seller. You didn’t get that 12 offer competition where, “Well, do I have to go a million over or can I just go 800,000 over? I don’t want to go 200,000 more than I have to.” Nobody likes to do that.
So with off market, you can make a offer, get a counter. But the other benefit that still exists is, you get to talk to the seller. You get to figure out the story. That’s very, very, very valuable, especially if someone isn’t necessarily sophisticated on what the asset is worth or good with finances. They just have a problem. You can help solve it. It’s trickier to do that when you’re having to go through your agents.
But what you’re describing, I really like it. If you get to know the agents who have these deals, they know their client’s story. It used to be with listing agents that you couldn’t get them to tell you anything other than highest and best. It was like a parrot squawking on a pirate shoulder. “Highest and best. Highest the best.” And they called themselves an agent. It was very frustrating.
Well, now they know which of their clients are like, “Nah, I don’t have to sell. I’ll hold on to this thing and I’ll wait for the market to shift.” And which one are like, “Nope, I’ve got a house being built in Texas, right now. I got to sell to pay for it. Bring me an offer.” And if you can figure out that story, you’ll know which deals you should be pursuing with the more motivated sellers.

Jamil:
It’s exactly right. There’s four pillars that I would say really determine whether or not an opportunity is going to make sense for what we do as investors.
First and foremost, you always want to understand price. You want to understand condition. You need to understand the seller’s timeline and their motivation. See, for us, when we’re typically negotiating belly to belly with a seller, you can get the answers to those like you just said, very easily or through some rapport building and conversation.
But typically, in the past, real estate agents because of the fiduciary duty that they have to their sellers and as well as if you’re talking to a listing agent direct, they’ve got to be very careful. But I think people are more open right now to sharing the reality, and I’m hearing it more and more and more. You’ve got these sellers that are in a desperate situation.
Right now, especially if they’ve taken the time to list the property, you and I both know that very rarely can you just list a house, put it on the market, and it sell. You’ve got to prepare for these things. You’ve got to do some repairs or maybe clean up the house and maybe even move out of the house. There’s things that people do to make their house more attractive to a retail buyer.
So if you’re taking that investment and if you’re doing these things, I think it’s really to your advantage to have a conversation with the agent to at least find out motivation and timeline. I think those things can really help you make adjustments to the price.

David:
Well, off market could have been, in many cases it was, sort of the make me move approach. I don’t have to sell my house, but if you get me two million for it, I’ll sell it. Get me 800. So then, some realtor would go and say, “Hey, I got an off market deal. It would probably sell for 950 if I put it on the market, but you could get it for 940,” and people were moving forward on those deals.
But now that isn’t the case, a lot of those non-motivated people, they’re sitting in the off market space. The motivated people, like you said, if you’re putting your house on the MLS, you’ve done some work. You have to be motivated to do that. You had to get it cleaned up. You had to spruce things up. You had to go get it ready for pictures. You had to spend some money on the pictures. You had to meet with the realtor. The realtor had to put some time and attention into this. It’s actually takes quite a bit of time to get a house listed on the MLS. It’s not just you push a button and it happens. So everyone’s motivated. The realtor’s motivated, the seller is motivated and the other people that are involved in the transaction are motivated.
So going on market, you typically will find a higher percentage of motivated buyers… Or sorry, motivated sellers and that’s what we’re looking for. So, I wanted to play a little bit of a game with you. I wanted to take turns seeing if you and I could share some of the ways that we know that a market has shifted from a seller’s market to a buyer’s market. Sound good?

Jamil:
I love it, man. Let’s go.

David:
Okay, I’ll go first.
One way that I can tell. The number of rings that it takes before a listing agent answers their phone. You try to call listening agent during the seller’s market, they don’t answer their phone. You have experiences like that too?

Jamil:
No, they’re overwhelmed. Oh my gosh. It was out of control. It was one of the most challenging things I would actually find in connecting and trying to buy houses was realtors just took a completely different… And I all due respect to people who work at airports. I travel a lot and so I definitely respect what they do but did you notice that there was when you couldn’t get away with even saying, “Boo” to anybody at the airport. You have to just be nice to everybody at an airport, right?

David:
That was that whole, you can’t say, “bomb” on an airplane skit, from Meet the Parents?

Jamil:
Yeah, yeah. You can’t do anything at an airport right now that somebody wouldn’t like because you can just get put on the no-fly list and thrown out. Right? It’s like, and that’s just what it is. And so everybody at airports is just insanely rude. I can’t… I’m not finding even the people at the coffee shop aren’t really nice to you at the airport anymore.
So, I feel like that’s sort of what happened with real estate agents. They got this power rush and they were like, “No, I don’t even have to answer my phone. You know what? I’m going to go get a recent headshot. I’m going to go to get a recent headshot and you’re going to do business with me even though I look 90 years old.”

David:
That could be one of the ones you say, right? The market shifted when the realtors are bold enough to put a recent headshot up.

Jamil:
Yeah.

David:
That’s a joke.

Jamil:
I’m going to go with that one.

David:
Realtors use headshots from… Okay, that’s going to be yours. It reminds me of a scene in the Office with Dwight and Jim where Dwight gets a raise and Jim says something like, “Never before has such little power led to someone having such a big head in the history of man.” That was listing agents, right? I sell one house a year and I have a listing and they would just be running around a 16 year old in their dad’s Ferrari, thinking that they were hot stuff. So true.

Jamil:
Insane. The other thing that I’ve noticed has happened very rapidly and it never before, is realtors are really interested in me now. When I do get ahold of them on the phone and I start talking to them, they want to know all about me. They want my full name now. They’re taking the time to actually write things down, right? Before it was just like, “Oh no, you send me a text. Oh no, you send me an email. Oh no, you do everything and make sure that you’re finding. I’ll forget you. I get so many people call me. So many people text me. There’s no chance I’m going to remember you at 5:00 PM today.”
Now it’s like, “Oh, hold on a second. Okay, you said your name was Jamil and how do I pronounce that? Wonderful. Oh my God. Such an interesting name. Where are you from? Where are you from?”

David:
That’s so true.

Jamil:
And you’re getting real…

David:
Descended from Mount Olympics.

Jamil:
It’s real. Yes.

David:
They’re rubbing elbows with mere mortals again.

Jamil:
So good.

David:
Okay, that’s a good one. How about this. The number of agents that will follow you on social media after you make contact? So sometimes when I call the listing agent directly, not only do they answer their phone after one ring, when it used to be you could call four times in a row and they were just going to send you to voicemail.
Now you actually see that they go follow you on Instagram, follow you on Facebook. After they get your name, they want to go see what’s up with this. Is this a real buyer? Is this someone I could actually make friends with? Have you noticed that too?

Jamil:
My gosh, I have actually had that happen to me while I was on the phone with an agent. My life has gotten a little bit more public in the last couple of years and so I have a blue check and I was on call with a realtor who searched me and found me on Instagram and said, “Oh my gosh, you have a blue check mark besides your name.” And to me that’s not a deal anymore. When I first got to blue check, it got to my head a little bit. I purposely left comments on people’s pages just to be like, yeah, because I feel like I had jewelry now. You got Instagram jewelry when you have a blue check. I’m over it now.
But when that agent said that, I was like, “Oh wow, you literally just went to IG right now, typed in my name, found me, and now you’re scrolling through my photos to see if I’m legit.”

David:
That’s very true. I’ve walked out of open houses and had realtors that looked me up and when I came back later that day, they were saying things that they wouldn’t have normally known. You didn’t see that when the market was hot. Nobody cared who you were. All they cared about was that price at the top of that residential purchase agreement that you better be sending over.
All right, how about this one? What about the percentage of times that we hear the phrase, the sellers are open to all offers?

Jamil:
Oh my god. What does that say? It’s tell me you’re desperate without telling me you’re desperate. Really though the number of like that, it’s like the sellers are open to anything, but back in the day… Well when I say back in the day, I mean March, okay?

David:
Yeah, right.

Jamil:
Back in the day, in the other world, you would literally have no low balls. You dare ask for repairs. The seller is not open to anything. I would love this to be a non-refundable earnest deposit, like as-is, all of the things. And now it’s like the sellers are open to all offers it. It’s like, what I almost want to know is, was it the sellers who became monsters or was it their realtors who became monsters when the market went crazy? Because I think a lot of those things the sellers wouldn’t even know to do, right?
What seller, who is an accountant out there in the world and doesn’t trade real estate very often, how many of them do you think know about escalation clauses?

David:
I mean escalation clauses weren’t even talked about until it was a ridiculously hot offer and it was a way for the buyer’s agents to be like, “Look, I don’t want to have to write 14 offers. When a higher one comes in, can I just write an escalation clause and be done with it?”

Jamil:
Yeah. For those of you that don’t know what an escalation clause, it’s what David just said, but think of it this way. Your agent was basically saying, “Hey look. If you get an offer of 450, we’ll go $5,000 higher up to 600,000.” How likely do you think that that offer hit 600 grand? I mean more often than not, it got there. I’m not trying to say that people were not being honest with respect to what those highest and best numbers were, but there was a lot of money that got thrown on the table that probably shouldn’t have.

David:
Yeah. That’s not hard to do. When you’re the listening agent and you get escalation clauses where they’re like, “Hey, we’ll pay 10,000 more than your highest offer and your highest offer is 550, you could just ask your buddy in the office, ‘Can you send me over an offer at 575?'” And then like, “Oh, now we’re getting 585.” That type of stuff would happen frequently, which is why I never ever advised escalation clauses. There’s no way that you can tell. We never use those on the David Greene team and sometimes buyers would get upset because they thought it was a guarantee and far from it.
What was the one that you mentioned? I forgot you had an example.

Jamil:
Oh, I was just talking about those head shots, man. Just coming in and really what I was thinking too? These promotional companies that make the fridge magnets and all the notepads and the pens, for a year, they had no business from realtors. Not a single realtor was like, “I’m going to invest in promotional items this year and going to make sure that people remember me when they’re using magnets.” No, no. The agents stopped doing anything. They stopped caring. A lot of them just were like, “I don’t even have to brush my teeth and I get paid.”
I think everything has changed. It’s a totally different world. Totally different world. I, oh… There was another thing, David, that I had no I’d noticed. So, price reductions. Oh my gosh, right? Price reductions. They didn’t happen for the better part of the early part of 2022, but now they’re very, very prevalent and I’ve talked to some realtors and have asked them their opinion on price reductions and why they do them.
Some of them think that when they make a reduction in price that it repopulates in the MLS and it bumps the listing up to a higher visibility and so they like doing that because if there’s an agent that may be a little bit less likely to scroll through all of the listings, maybe they just want to skim off the top, those realtors will now see, or I should say real estate agents because now I learn the difference between a realtor and a real estate agent and I didn’t realize that there was a distinction. But those real estate agents, they would see that and now these price reductions have become silly, right? It’s like every real estate agent wants their listing to be at the top, so you’re getting price reductions of a hundred bucks.

David:
There’s a lot of that. So, that you’re right. What happens is when people set their buyers up for a search, what happens is you can look for every house within parameters, like this price range, this size, and it will show you all of them.
Then after that, it won’t show you the same houses every day you’ve seen, it will only show you the new stuff that just came on, or something that had a price reduction. So that was a little trick that we figured out. If we’re not getting traction, we can do a price reduction. People will see it again, which might make sense after it’s been on the market a week. It’s not still product yet, but it didn’t get an offer in the first week, we would do that. But like you said, people just, they always do what people do. They get a good thing and they ruin it.
So you have realtors dropping it by a hundred dollars or by $50 and then it shows price reduction and it like the little negative 50 or something, so that’s another sign that you’re in a buyer’s market is when you start seeing ridiculous things like that. Or when the seller’s like, “Well nobody wants my house for 900, so let’s drop it to 875.” I promise you brother, if no one was buying it at 900, because there’s so much competition, it doesn’t make sense at 875. You actually have to accept, I need to drop my price to 800 or 775. The market has gotten away from me.
So in these hot markets you’ll frequently see these price reductions that are just minuscule that aren’t even keeping up with how fast the market is dropping and it’s almost funny. What is going on in their head that they’re like, “Maybe if I just change this one little thing, the universe will bless me with the buyer that I’m looking for.” And that’s not how it works.

Jamil:
It’s not. It’s lazy.

David:
I agree with you. That’s another…

Jamil:
Ir’s super lazy and I’m sorry if you’re listening to this and I’m talking to you right now. We’re onto you.

David:
We are onto you and we are sharing the information with BiggerPockets, as Jamil who works with realtors and me who is a realtor, we know the schemes, we know the tricks, we live in the matrix and they’re not going to work on us.

Jamil:
What about these interesting times that people are conducting their showings. Back in the day first, and when I say back in the day again guys, I mean March. In March, there were no open houses. There was just, it wasn’t going to happen. But now they’re doing broker opens and they’re doing twilight open houses and they get wine. You could actually feed your entire family for a whole… I bet you could feed your family for an entire month going around from open house to open house to open house and have some of the best food. You’d get a charcuterie board everywhere you went for the next 30 days if you wanted to, on the house.

David:
This is such a good example because I know what it’s like to be in the agent’s shoes. When you have that seller that you want to list at 975, they insist on going in at 1.1 because they think they know better and they’re looking at prices from back in the day, March, thinking that they’re still going to get that again. Right?
And so the house isn’t selling and you go back to them. You’re like, “Look, it’s been four weeks. We’ve had two showings. Not only are they not writing offers, no one’s even looking at your house because it’s priced too high. When they see what 1.1 gets them, they have better options. And when they, the people that can actually afford this house are looking at the 975 range, they’re not looking at the 1.1. We got to drop it.” And they never say, “Yes.” They always say, “Well, have you held a twilight open house? Maybe if you get the twilight and you get better cheese. What cheese are you putting out, actually? Are using the cheap stuff? I’m paying you 3%. I want the nice cheese. That’s going to get people to come see my house.”
You scratch your head because they will never know there is an open house because they’re not looking at houses like yours in the 1.1 price range. It’s like it’s so frustrating when you’re dealing with those sellers that still think that way and you’re as the agent and you have to tell them, “No, you maniac, this twilight open house with all your expensive cheese, is not going to provide any more people showing up. And if they do, it’s just going to, your neighbors that come eat your cheese.”

Jamil:
My gosh, dude. Now I just figured out where they came up with the name Laughing Cow cheese. The cow is laughing at you for putting the cheese in there, you dummies.

David:
That’s it. So if you’re listening to this and your house is listed at 1.1, it’s getting two showings, drop it to 975.
All right, let’s move on to the next hero. We are going to talk about on market versus off market strategies, particularly what you can do if you want to get a deal on market house.
Now before we go there, Jamil, do you have any advice for off market deals? Is there anything you’re seeing particularly that’s working or do you just think that space isn’t as good of an option right now?

Jamil:
Well, I do have one. I got one trick. For off market doesn’t necessarily have to be without agent. Okay? Let’s understand the distinction between off market just means it’s not listed on the MLS, but that doesn’t mean that it doesn’t have agent representation, or could be a pocket listing, or there could be a relationship that a realtor has with a specific seller that they know they’re not quite ready yet, but it could be coming to market at some point. There is a massive opportunity for the entire BiggerPockets audience to hear this, take action, and get it done.
You want to take advantage of all of the industry knowhow or all the industry knowledge, all of the current market condition knowledge, but still get an off market house, start having conversations with realtors, building relationships with them and finding out if they have anything coming to market that’s an original condition or needing a substantial amount of work that you might be able to take a look at before it gets listed.
You see, there’s nothing that an agent hates more than a stale listing and they know that if they list some of these really gnarly houses on the MLS, it’s just going to collect days on market and it’s actually going to be to the detriment of the seller. You can convince a realtor to really take that into consideration and present that solution to a seller to say, “Hey, would you just like to hear from this investor and see what their offer would be? I think that we might be able to get him to pay more than he may have been able to pay if it was just on the market.” And that gives you that entrance through the side or back door guys, that still gets you an off market deal but still is being dealt with through a real estate professional who can talk sense into your seller.

David:
And someone might hear that and immediately think that’s not going to work. I tried it before. If you tried it during a seller’s market, it wasn’t it likely to work because the agent wants the ego boost to being able to go drive their dad’s Ferrari. I have a listing, I am now posh, I put my pinky out when I drink. I swirl my wine that I have at breakfast. Nothing gets a realtor going more than being able to say they have a one or two expensive listings and so you saw just the power went to their head right off the bat. It was very frustrating.
Not like that. The tides have turned. These realtors are now desperate. Like, “You got to buyer. Oh my god, let’s talk. My seller’s open to any offer,” is what’s coming out a lot. So I agree. Asking realtors for something they have coming, especially if they’re thinking they might get to double end it, they will prioritize you over putting it on the market, having to spend money on pictures, having to put the worker going to MLS, having to have the talk with their seller every single week why nobody looked at the house and everyone blames the realtor when that happens. That’s just how this works. The question’s always, “What are you doing to sell my house?”

Jamil:
And those gnarly houses, David, like those ones where the seller is really, really worried about how much they’re going to have to do to get the house prepped for the listing. I mean when you’re talking a hoarder situation or something that’s just falling to pieces, I mean those people really need our offers, they need our help, and you can put together some pretty great situations.
Imagine this, the realtor gets to double end it. They take 4% instead of 6%. The additional 2% goes back to the seller and it’s a win-win-win. What a beautiful day.

David:
So, if you’re going to look for off market deals that don’t have representation, that can help you too. I would say go for both. Talk to realtors about what they have coming on and if you come across a seller that might want to sell their house, they’re probably hearing the same news everyone else is hearing and there’s a good chance they understand the market’s turning I want to sell before it gets worse. That was different than I won’t sell, unless I get a ridiculously good offer.
The psychology, the collective psychology of the entire market has shifted drastically, and that’s a situation where you have an advantage as well. The standard seller doesn’t listen to the podcast, doesn’t follow the news, doesn’t know what the other houses are selling for. They’re not aware of the market we are. They don’t know what it costs to fix something. If they know they have a house with problems they don’t know. They can’t convert that problem into a dollar. We can because we live in this industry all the time. So, you have an advantage dealing with a seller who doesn’t have representation and you also have an advantage dealing with an agent with the deal before it’s gone to the market. Take advantage of both of those situations and off market opportunities.

Jamil:
Absolutely.

David:
All right, let’s talk about some on market strategies now that will work. Frankly, this is what I’ve been using. I bought a handful of deals off market, maybe I can think of two, maybe three, but probably 15, 16 that I bought on market. And it’s funny because I’m finding that there is more motivation on market, especially when you follow the techniques that we are about to give you.
So take out your pencil or if you’re not old, take out your phone and write some notes down where people actually take notes now. Don’t know why I said pencil. I’m sure the day is coming when people will look at a pencil and be the same as if we looked at a cassette player.
Do you think, Jamil, I’ve always wondered, how old do you think people are that don’t know why the save icon is a floppy disc on a computer?

Jamil:
I mean I bet you, right, there’s like a whole generation that doesn’t understand it. That they have no idea what it is. They don’t even know what they’d never seen a three and a half inch floppy disc. Or what about the floppy discs before that? Remember the black ones with the little film on it and you couldn’t touch them because if you touched them in that little spot, then they would be… It would… It’s like wiping the fairy dust off of fairy. They can’t fly anymore.

David:
Like exposing your camera film to the sun, which now there is no camera film. You don’t have to worry about that. Yeah, that was a thing we were really worried about that you are hold your breath when you’re like, “Oh God, I have to take the film out of my camera. I hope I don’t do it wrong.” Don’t have to worry about that anymore either. All right.
So one of the things that we’ve talked about is sellers are going to be more motivated if they’ve gone through the work of putting their house on the market.
Another is the emotional influences that are inherent in on market deals. So sellers are often looking at other homes, while their house is on the market. They don’t just sit there like a disciplined person should and say, “I’m going to wait for my house to go into contract, see what price I get, wait for contingencies to be waived, then I will go look at houses.”
No, no, no, no, no. They get emotionally involved in their next house while their house is sitting, which creates this pressure cooker. Because on one side they have pressure, “I want to put this house in contract. Someone else is going to buy it, I want to move on.”
And on the other side, they have this pressure of, “Nobody’s going to buy my house. Prices are dropping. Rates are going up, and as rates go up, my house is worth less. But at the same time, the house I want to buy, I’m going to have a higher rate. I got to do something now.” And you want to be the person to come in and take the pressure off of them.

Jamil:
I saw that play out right in front of my eyes right now on a flip. We had a flip that we had a seller come in, they wanted the house so bad. They said, We have to sell our house.” And we thought, “No, we can’t do a contingent offer. This is never going to work.” But we asked if they would allow us to help them with pricing. So, we had to approve the price that they were going to list the property at, in order for us to accept the contingent offer and they agreed. They agreed to that. And so we helped them come up with the listing price and they actually went under contract, after multiple offers in this crazy market.
So, we had them listed pretty low, but they still got multiple offers and so that absolutely worked. And what you just described right now, David, is on the nose. It’s on the nose. When you create that pressure cooker and you can be the person that comes in and relieves the pressure, there’s nothing like that. And you want to talk about getting a tremendous opportunity, rewind what he just said. Actually, what’s the new word for rewind? Is there a new technical word for rewind?

David:
Yeah, we don’t rewind anymore. We’re talking about this old technology. That’s exactly right. Put your finger on the red circle and move it to the left.

Jamil:
I love it.

David:
So, that’s why having a good agent really helps, right? Because if you’ve got me or another agent who actually owns property, we understand the psychological component to negotiating, not just the numbers element of it. Real estate is very, very emotional even though people don’t realize it.
All right, let’s get into the next one. This is the most important thing to look at of all of your thing. It’s that the number of days the house is on market. When I’m looking for deals, I don’t even look at something that hasn’t been on for 30 to 40 days. When I put my search together, I start at 30 to 40 days and then I prioritize 80, 90, a hundred days on the market.
So when people say, “Well it’s easy for you to find deals. If you started looking at the clearance bin, you’d find that the store was much more likely to negotiate on the price as well. These are sellers that have already had their dreams destroyed of selling with multiple offers really easy. They’ve been told at this point, “You have to fix up your house. You have to make repairs. You have to clean it. It can’t smell like dog urine.” There’s things that have to be done and they’ve just staunchly decided they would not do that. They’ve already been marinating in worry and they are prime for you to come in with a very aggressive offer that won’t look bad to them because it’s better than no offer.

Jamil:
I totally agree. There’s one caveat. There’s one little scenario where this has a little bit of a lower likelihood to work and that’s when they went under contract, immediately after listing, and it fell out and then it sits. Oh, when a seller gets that first taste of we’re under contract and they think that the house was going to work at that number and usually it’s a wholesaler that comes in and screws it up for everybody because they’ll go in and put it under contract too high. They’re thinking that there’s a deal there. They comped it wrong and there’s no deal there. And now all of a sudden the seller has this misguided belief that their house will actually trade at that number and now it’s this standoff and the seller is trying to get it. But high day is on market, David, it is the holy grail of getting a good deal.

David:
Absolutely. Now you bring up a really good point that would relate to the next point we’re going to make here, which is look for houses that are back on the market.
So back on the market means it was under contract, it fell out, it’s back on the market. There’s two ways this goes. The first is what you just said, Jamil. They got a taste of thinking their house is worth way more than it is and now they don’t want to accept that it didn’t sell at that price. In their head, if they sell for less, they’re losing money. Even though the market is clearly telling them that wasn’t accurate. The other person, receives that same information, but goes a different direction. They go, “Oh my God, I was this close to getting it sold. I had my next house picked out. I had the furniture ordered. I walked the house with my kids and they picked out their bedrooms. My whole family is ready to move in. We’re already researching the schools.” They made that mistake and now their house falls out of the market and their dream is being threatened and maybe their house was under contract at 900,000 and they only owe 500,000.
For that person, you go write an offer at 775. That still makes sense because it keeps their dream alive. They’re not just looking at the money.

Jamil:
This is the magic scenario, right? Because you’ve got that person emotionally invested. And guys, we really have to take this to heart. When David says this, it is absolutely facts. People will walk away from hundreds of thousands of dollars of perceived value, in order to keep their emotional dream alive.
I can tell you this, as a person who was a real estate investor myself. The dumbest decisions I’ve ever made was buying personal residences. Ever. I know better. I always know better. I know what to buy, I know how to get a deal. But it’s when my wife looks at me and says, “But honey, I really love it.” And my children are, like you said, picking out their rooms and thinking about which of their friends live nearby so that who are they going to hang out with and play with?
I was actually, funny enough, I was trying to buy a house not too long ago. For tax purposes, I was trying to see if I could buy a house in my LLC and then rent it to myself. It doesn’t work. There’s a arms length situation there that didn’t make it work. But we were going to go buy a very expensive home and to make this situation work as a tax break. My wife got really invested into it and my kids got really invested into it and it didn’t work out for us and it was heartbreaking, brother. I would walked away from hundreds of thousands of dollars just to make that situation real.

David:
There’s a person involved in the BiggerPockets community who I will not say their name, who at one point wanted to buy a primary residence and didn’t quite have enough capital to make it happen. They came to me and said, “Hey, can you lend me a couple hundred thousand dollars so I can close on this house? I’ll pay you back later.” And it was a two million primary residence that they had fallen in love with. It was the same story that you’re telling. Beautiful backyard. Every amenity they could ever hope for. They fell in love with the house and there was 10 other people that also fell in love with it. And I was like, “All right, I’ll just tell you right now. You’re my friend. I’ll let you borrow the money if you want. So, let’s just set that aside. Let’s talk about if this is a good move for you.”
I talked sense into them. Friends don’t let friends overspend on primary residence moments and I am so glad that they admitted, “I don’t want to do this. I’m kind of pissed at you for telling me this, but I’m just going to listen to you because you’ve been in longer than me.”
Two months later, the entire market shifted. That would’ve been one of those stories that you hear about someone bought their dream home and then lost it to foreclosure because they would’ve overpaid. But man, that never goes away. That fear is real. You got to talk to people when you’re getting ready to make a decision like that because you need that perspective. It’s like you get drunk on this home. Home intoxication is a real thing. So, I agree. You got to be careful on those primaries.

Jamil:
I want to get that put on a t-shirt; Friends Don’t Let Friends Overspend On Their Primary Residences. I’m going to put that on a shirt.

David:
Yes, that’s good.
Next thing is listen to the news. If you hear Jerome Powell saying the market’s going to crash. We’re going to keep raising rates. The sky’s falling. All the home sellers are hearing that too. And I will purposely, when I hear the Fed come out with bad news or all the YouTube channels saying, “Oh terrible things are going to happen,” I make it a priority to go write more aggressive offers the next couple days because the sellers are probably hearing the exact same thing and you want to hit people when they’re in that panic mode.

Jamil:
Yeah, that’s a brilliant strategy and you know what? I haven’t used it enough, but I think that that gives us a lot of days to look forward to. I mean, leading up to a rate hike, I think you could and we know that they’re coming. We know that there’s more coming down around the corner. I think that you could start having those conversations with homeowners prior to, so if we’re the week leading up to a rate hike and then the week following a rate hike, I think that you’ve got two weeks of juicy negotiating opportunity there. I think that’s brilliant, David, and I would absolutely, absolutely advise people to do that.

David:
That is actually another method. I call it, having several lines in the water. So, I don’t usually pursue one house at a time. I’ve got several offers and actually this combine two methods here.
I’ll say let’s, I’ve got six houses in areas I really like. I really like the property they’re listed at. Let’s just assume all of them are at 1.2 million. I don’t want to write an offer that’s going to be accepted immediately upon issuing it. That means I went too high. I look at an offer. In a seller’s market, when they have all the power, you got to throw haymakers. You got to knock them out in one punch. That’s your only chance. This you better throw a superman punch to start the fight and if you don’t get it, you’re getting torn apart.
But in a buyer’s market, you want to throw a jab. An offer is just meant to test them. How motivated are they? How far down do they come off their price in their counter offer? Are they eager or are they not eager? If they’re not eager, I just let it go. If they are, now that starts the negotiating process of how far can I get you down?
If I do that with five or six different homes and I’ve got several different sellers that I’m working on over the next coming weeks, like you said, they they’re at 1.2, I write it at 900 or I write it at 950. They counter me at 1,000,050. They came down a lot. Okay, that’s a motivated person. I stay in touch with them, but I don’t try to put it in a contract the next day. I want to see is the news going to turn bad while we’re here? Are rates going to go up again? What are they thinking? Are they falling into Chicken Little? As the days on market, maybe I wrote the offer, it was at 40, now it’s at 60. Now it’s at 70. That’s stacking in my favor as the buyer. I have the leverage, I have the thing they want, which is the ability to close. They used to have the thing everyone else wanted, which was the asset.
So, I’ve got all these lines in the water and the fish are coming towards the boat at varying degrees and I’m just waiting to see which one of these fish gives up and just jumps on into the boat.

Jamil:
Brother, that’s such a masterful negotiation strategy. One of the ones that I’ve been really paying attention to as well, is how much of a relationship I can build with the listing agent. And that brings us to the next one is really finding ways to create positive relationships with these listing agents, where maybe they’ll let you do a dual representation. Maybe there’s some states that don’t allow it and I understand that it’s not going to work all the time. But even in those markets where you can’t do a dual representation, I will still contact a listing agent, create a relationship with them, and then I’ll ask, “Since I’m not working with anybody, do you have somebody that you could refer me to, that could write the offer for me?” And now all of a sudden it’s their daughter or their cousin or somebody in their office that they owe a favor to.
So, you’re still getting that proximity. You’re still aligning to their side of the equation, which wins them over essentially. Because look, if it’s a family member that might just be coming into their business as well. If it’s a friend that they owe a favor to, this is emotional income. This is an opportunity for them to scratch somebody’s back, that they’ve been wanting to scratch for a while.
So aligning yourself with listing agents so that you gain proximity, closer proximity to the seller, it’s such a powerful way to play guys. Because now they’re gunning for your offer to be accepted. They’re telling the seller all the reasons why you’re the person that they should go with.

David:
That is another point we have on our list, Jamil. It’s like you were born to do this. You have to win over the listing agent and this is something I learned in the real estate agent game, myself. If the listing agent takes the offer, let’s say their client’s house is listed at a million and my client wrote an offer at 900,000. There’s two ways it could be presented.
“Hey guys. I have an offer I’m legally obligated to present you to, but just don’t worry, we’re not even going to consider it. These idiots think that they can buy your house for 900,000. They’re low balling jerks. Don’t worry about it. I’m going to get you a better offer. Hang in there. We’re just going to reject this. Okay?”
Versus, “Hey guys, good news. We got an offer and it’s actually not too far off. We’ve been considering a price reduction. We might not have to do it. This is close to what we were thinking we were going to have to reduce it to and they’re willing to shorten their contingencies. They wrote it at $900,000 and there’s a very strong earnest money deposit here. What do you guys think about this? We can start looking at your next house.”
The lens that the listing agent presents that information to the client through, is wildly important. And this is why if your agent is a butt-head or has a big ego and gets into it with the other people, it has a significant effect on how your offer is presented.
Now when there’s going to be 12 offers, it doesn’t matter, they’re just going to go with the highest price in the best terms. But in the situation where there’s not multiple offer, that human component is very powerful. And what you’re describing there, Jamil, is how you yourself can win over the listening agent.
One of the things when I’ve got those six lines in the water, one of the actual metrics I’m looking at is not just the home, it’s the agent. If I got an agent who’s not interested in us, who doesn’t really get back to us, who doesn’t seem like he’s that motivated, I won’t prioritize that fish or that line, nearly as much as the other ones because I got an uphill battle trying to convince that agent to sell the client.
When I have an agent that’s like, “Please get me an offer. Let’s make this happen,” and I know they’re going to present my information in a positive light, I will even coach that agent. I will say, “Hey, here’s the way you should present this to the client. I know the price is low, however, tell them that you negotiated an extra $12,000 higher than I was stuck on and tell the clients that you saved them an extra 12 grand if they take this and then just we’ll have a $25,000 closing cost credit, which you can just tell them is standard in the market right now.”
If they take what advice I give and they actually go say that, you’d be amazed how often the sellers will come back and accept that. I had this on a house I put under contract a couple days ago. They were listed at 1.175. I wrote the offer at 1,000,050 with about 40,000 in closing cost credits. They said, “No.” I waited. Or no, then they countered me in 1,000,075. I waited. They came back and accepted 1,000,050. I said, “Well, that was my offer four weeks ago before they raised rates. Now you’re going to have to do better.” I didn’t even send a new offer. I told my agent what to say. He went to their agent, they came back and said, “We’ll do 1,000,025,” and I still got the closing cost credits. So now I’m under a million on the net price on a house that was listed at 1.175 that I’m going to double the size of through the BRRRR Method.
All of that was just because of the way that we got their agent to communicate the information to them. I timed it with the rates just went up and the Fed said they’re going to keep raising rates, so now the agent can go to the client and, “Guys, if we don’t take this offer, it’s going to be even worse in a month. The market’s going down.”
So, those are all ways like Jamil, that what you said, there’s nuance this. It’s not just about shotgunning offers, like what worked in 2015, when the advice was, just write a hundred offers and five of them will be accepted and of those you’ll close on three. This is a different space.

Jamil:
That was crummy advice then too, though. That was crummy advice back then, as well. You know what? This guy’s… Let’s understand that this is a business of relationships, right?
Let me tell you, there’s one thing that I have very rarely done. Multiple deals with a homeowner, when I go seller direct. Very rarely do you go and go direct to seller and build a relationship and do such a great job for them that they give you 10 more houses. Doesn’t happen, right? Because you build a relationship or they have one house and they sell you their one house, and that’s the end of the day.
But I can tell you I’ve got multiple relationships, in fact, dozens of relationships out there with real estate agents, that I’ve done upwards of 10 to 15 houses with on a year to year basis. Now just imagine that. These are friends. These are people that invite me to their Christmas parties. These are people that I hear about what’s going on with their lives and with their children’s lives. And we’re actually in each other’s worlds. I get first look at any listing those agents have. I get to write them a cash offer, day one, and they’re always telling their sellers how great of an investor I am and how I always perform.
And even when the market was nutty, even when prices went, skyrocketed, I was still in the conversation.

David:
That’s brilliant. That’s where the money’s going to come from. Okay, we covered a couple points to the example I gave. One of them was make your offer and if they don’t accept it right away, you can go back to the agent and say, “Hey, that was our offer on that day. The market has decreased. If they want to sell me their house, it’s going to be less. I would advise you to accept the offer before it gets worse.” Jonathan Greene mentioned that on previous podcast we did. I think that that is good. You don’t always have to say it as directly, but if they come back to you, it is okay to say, “Yeah, that was my offer three weeks ago. The market’s not as good.”
Another one that we mentioned there was to have several lines in the water and then to set a follow up system. So, I’ll write an offer. They say, “Thank you, but no.” Or they counter, but their counter isn’t aggressive enough. That doesn’t mean I give up. They go into a CRM. We get a reminder. They go on a spreadsheet of offers I’ve written and every week we reach out and say, “Hey, has anything changed?” Because guys, things change. They find that next house they want to buy, they hear the news and they get scared. They realize that, okay, I was listed way too high. They hear some horror story of somebody else who had to sell their house for way less. They get emotional and in that moment, they go sell and this is how people do things.
This is why stocks, crypto, everything tends to crash at once. Everyone hears the same news. Everyone goes and immediately panics and does the same thing and this is why you see markets collectively go up and down. So, use that to your advantage.
The last point that I have here is going to be a silly one, but it’s to look for poor marketing pictures. The way that real estate sales used to work is that you would have to, as an agent, actually do work to go market a property. You had to find ways to get it in front of someone. The newspaper, a periodical, a magazine, the classifieds, some billboard, right? How can I get someone to see this house and make them interested in it and then they will call.
And the problem is, realtors still act like that’s how it works. You’ll hear them say, “I will get your house in front of more eyeballs than anybody else ever can. I’m going to advertise it on Facebook where everyone’s going to see it.” Until those go, “Ooh, that sounds good to me. We’re on Facebook.”
And you never think, Has any of us ever saw a house on Facebook and said, “I’m going to go buy it right now without looking at any other houses. I haven’t been shopping. I’m not pre-approved. I don’t want to see any of the other homes. I’m just going to buy that one.” It’s crazy. That just gets advertisement for the realtor. It’s not for the house.
The way it works now is online dating. Everybody sees everything. There’s no secret place to go look at houses other people aren’t seeing. Not only are they all in the MLS, but they’re on Zillow, Realtor, Redfin, Movoto, all of it. The key, just in online dating, is to have a picture that everyone sees and says, “I want that one.”
Now, I’m not in online dating, but a long time ago when I was in law enforcement was kind of my only option because the crazy hours I worked and I remember how horrible that was because there was way more dudes than girls, so it was kind of like being a buyer in a seller’s market where it’s very difficult to get any attention there and they’re getting way more opportunities than a guy would be getting. They don’t know anything about you, so they don’t know if you’re a serious buyer or if you’re not. They just see a picture and the only shot you have is that very first picture someone sees has to catch their attention. If not, they’re swiping the other direction. I don’t even think it was swiping at the time I was doing it, but you get the picture.
So now if you want attention on your listing, that first picture has to be amazing. The next couple really have to pull you in, or they’re not even going to look at all of them. They’re going to go like two, three pictures in, Nope, forget it, I’m done.
So, I purposely look for terrible listing photos. I like it when four pictures in, the photos sideways. Or they skipped on the commission, so the realtor didn’t get professional pictures taken and you see them in the bathroom mirror taking their own picture. It’s dark. It’s poor angles. Things a professional photographer would never do. Because even if people see that house, if it’s priced well, they don’t look deep into it. It doesn’t catch their attention and they don’t want to set up a date, which the equivalent would be going to actually look at the house where emotional connection can be made.

Jamil:
David, it’s so interesting that you bring this up. I remember laughing my butt off at one photo that I had seen an agent put up and I actually ended up wholesaling this property. I got under contract, wholesale at mid money.
We literally fixed the marketing, which is what you’re talking about. The photo that this agent had taken was from the second story bedroom window, into the backyard. There is dog pooping in backyard. The perfect time, perfect place, perfect opportunity for a great, great segment. I was waiting for you to drink that water and I’d swallow it.
So, the thing is, I’m looking at this, I’m like, there’s no way this house is ever going to sell with this. This is the most unappealing thing I think I’ve ever seen in a house. And a realtor thought, and maybe the agent thought this was funny, or maybe they thought cute. Whatever it was, terrible decision. And we ended up getting the house at a steep, steep, steep, steep discount.

David:
I feel pretty confident Jamil, that if you had looked into that, you would’ve seen that it was a discounted commission. That’s what that sounds like to be.

Jamil:
Oh, absolutely. Absolutely. There was no care there. There was no care there on the part of the realtor. And the fact that the seller, I’m sure that they looked online and saw that and must have been mortified by it but what can they do?
You see, the thing about retail home buying is, I’ve learned this. That when somebody’s looking at a house that they potentially want to buy, they’re not making that decision by themselves. They’re sending that listing to all of their friends and all of their family, and they’re looking at the pictures. And then when they’re looking through the pictures, they’re responding to their friend or family saying, “That’s the one. That’s the house. Oh my God.”
So not only does it have to create an emotional impact on the person who may be the buyer, but it’s got to win over all of their family and friends. And if you can’t see how somebody’s marketing is going to be able to do that, there’s a really good chance that you have an opportunity to get in there and get a deal.

David:
Yeah, you’re supporting my online dating theory here. If your picture’s terrible and that girl sending it to her cousins and her aunt and she’s like, “What do you think about this person?” And they’re like, “Oh, you could do better than that.” It doesn’t matter that you could have a lot of other good qualities. They don’t show up in that picture, you’re not getting a chance there.
So you have, this is how brains have been formulated to work and the world that we live in now. Dating works this way. Real estate works this way. A lot of things work this way. Pictures, photos, the visual aesthetic of something has become more important than it probably should be. So, I’m a big fan of, I want to see those pictures that look bad. I want to go look at the house because odds are that house with a dog pooping in the backyard probably looked just like every other house on the block. When you actually saw it, it didn’t give you the same impression as that terrible picture but you want to go look at that one because all your competition, all the other buyers, they don’t want to go look at it. They think that the pictures are terrible.

Jamil:
David, I got one last one for us guys. In times like this, especially with all the things that we’ve just talked about, now is the time for you to talk to your real estate agent about pitching creative options to their sellers. Maybe this is just the right time where you can go get a seller finance or a seller carryback, a subject to. These are the conversations that we can start having when there’s motivation and not a lot of equity to deal with. So, I think that all of the things that we talked about today were fantastic and they opened the door to even more creative opportunities.

David:
It’s exactly right. No, but no seller wants to do something scary when they don’t have to. When someone’s just going to go get a loan from a bank and put a big down payment, of course they’re going to take that option.
However, when it’s getting close to prom and you don’t have a date for the dance, you’re willing to lower your standards a little bit and some of these creating options that we teach on a podcast like this can become much more useful. So, you got to have to coach your agent, or the other agent and how they work, but you should definitely look at that.
Jamil, I really appreciate you being here and sharing some of this information about what you’re seeing for buying on market deals. Quite frankly, this is why I say I’m having more fun now investing in real estate than I ever have in my career because I’ve never been able to use any of these techniques with the success that I am right now.
I’ve used them to a degree for my clients in some ways, but oh boy. Now if you’re a buyer, if you can get pre-approved, if you have the capital and you’re willing to play, all of the balls are in your court.

Jamil:
I absolutely love this and I think guys, now more than ever, especially if you’re looking at, how do I get involved? How do I go and kick down the door of my real estate investing career? Take some of these tactics, take some of the things that we’ve taught you today, and go and get yourself your first deal. Get that deal and you can steal it right now. Go take advantage of the opportunity. Go take advantage of the market. Get yourself the best deal you would’ve ever been able to get and make a life out of it.

David:
All right, Jamil, before I let you get out of here, where can people find out more about you?

Jamil:
You can find me on my Instagram @JDAMJI. That’s @JDAMJI. Also, I have a YouTube page where I talk a lot about stuff like this. It’s just youtube.com/jamildamji.

David:
There it is. You can find me @DavidGreene24, all over social media, talking real estate, and on YouTube at David Greene Real Estate.
If anybody listening knows anyone at Instagram that can get me the blue check mark, there are so many fake accounts. They come up every single day. It’s exhausting trying to take care of that. I’ve applied 25 times, I can’t get the check mark. I’d love it. Jamil, you’re raising your hand. Does that mean that you can help?

Jamil:
Yeah, I got some people.

David:
Okay. Well thank you for that. Hopefully this happens. It’s been more difficult to break in to than Fort Knox, every single time I’ve tried, but it would be very nice if people could know who the real David Greene is.
Until then, be very, very careful. Look for underscores. Look for periods. Look very closely at the screen name of whoever is messaging with my pictures because it’s often not me.
Thank you very much, Jamil. Appreciate you being here. I hope we see you on future shows and I will see you soon at BP Con.

Jamil:
Thank you, David.

David:
This is David Greene, for Jamil, stealing deals, like Ricky Henderson is stealing third. Damji, [inaudible 00:55:34].

 

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In This Episode We Cover:

  • How the housing market has shifted and whether or not we’ve become a buyer’s market
  • Off-market vs. on-market deal-finding strategies and which makes sense in 2022/2023
  • Using “emotional influence” to get a seller to agree to your terms as soon as possible
  • Building relationships with listing agents so they act as your ally in a deal
  • How to leverage “bad news” to turn frustration into motivation for a seller 
  • Tell-tale signs of a motivated seller that will quickly get a deal done
  • And So Much More!

Links from the Show

Connect with Jamil:

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.