Hi yall, real estate newbie here. For the past 6 weeks, I've been making offers for properties on the MLS at asking price or above. A lot of the times, seller's agent doesn't even respond, and if they do they let me know they have multiple offers. Is it still worth looking on the MLS, or am I better off trying to get off-market deals? Any thoughts?
Off market is always best. The MLS is super competitive. Everyone can see it. Multiple offers usually kills the investor. It doesn't mean you can't find deals on the MLS but know your going to have fierce competition. I try to find properties on the MLS that are old; 6 months or longer. I have bought properties in the past year from my local small banks. They sit on properties that they have foreclosed (REO). No competition and you can find good deals. You will probably need to buy with cash as there pretty beat up. There great for flips or BRRRR.
There's no point bidding as an investor on MLS properties in the first week with everyone else. You want to look for the ones that get to 30 days and then like @Kenneth Garrett said, 4-6 months can be great, as well as an alert for all properties that come back on market after a failed deal. Those are super ripe because you can often hop into the pending transaction if you are quick enough as they don't want to do the whole thing again just to get screwed. I mail a lot of markets for off-market, but we still buy on the MLS in one of the hottest markets in NJ. We just pick the properties that others missed.
I agree - I like the 30 plus days. Additionally, if I offered previously and the answer was No, I go back and offer again 3 - 4 weeks later and keep repeating until it sells to someone else or we can at least get into a counter offer situation. I try to invest as little time and emotion into the offers as necessary....that way I can do more and it disappoints me less.
Keep after it, plus explore other options such as off market deals. Best of Success!
@Victor Oben You can find deals on MLS, but it's tough right now. There are a lot people waiting on the sidelines with loads of cash. What type of deal are you looking for? Depending on what you want, there may be better strategies than blasting offers on MLS.
I agree with going for the 30+ days on market properties. With as quick as inventory is moving, sellers with properties that have been sitting long are more receptive to your initial offer because they are trying to unload the property. There still may be some negotiating, but you're not competing with others. Another route is canceled and expired listings. You know the owner wants to sell but wasn't able to for whatever reason. If you are good and have/develop the skills, talking with them and getting them to sell to you is a huge advantage.
Are you actually seeing deals in the MLS that will give you cash flow and appreciation?
You might want to take a second look at how you are running your numbers.
You need to have an edge. My edge is I know the rental markets block and block and can identify properties with far below market rents. Learn the areas really well and this strategy should help.
@Victor Oben I'd suggest finding off market via wholesalers or by doing your own off market work. Finding something on the MLS is a tough.
@Cole Raiford where does one find wholesalers?
I always go with the listing agent. I tell them I'll use them. Now they're getting the full 6% commission. And they'll tell you what it'll take to get the property. My last property I was outbid by 7k over asking price. They had 14 offers. The listing agent told me what it would take to get it and gave me a chance to up my bid at the last second. I've found 6 out of 10 of my properties off the MLS. There are plenty of deals out there off the MLS. Keep looking.
@Victor Oben The MLS is a great resource but should not necessarily be your only avenue to finding deals
@Simon Obas , Google "we buy houses" and add your city name. Most of the websites that pop up are wholesalers.
@Owen Dashner thank you
@Simon Obas on google like Owen said, on BP, etc.
My first 4 fix & flip projects were all from the MLS. However, like some previous replies already mentioned, the properties were sitting a while (>60 days) for different reasons and I was able to get my below asking offers in and get into a negotiation with the sellers. Most of them were foreclosures so I was dealing with a bank as the seller. When starting out, it helped having the agents involved with the process, which is the case with any property on the MLS. My attorney also helped (I'm in NJ which is an attorney close state), but there were things I did not need to worry about for these first few deals which helped a lot. Staying away from new listings that just come on the MLS is great advice since you will probably end up paying too much for a property since there is so much competition and you are anxious to "just get your first deal". Don't get tempted. Run your numbers and stick to them. With all that being said though, I was willing to overpay a bit on my first deal so that I could get my feet wet and educate myself on it. What I learned on my first deal was invaluable and well worth paying a bit more for it. I'll probably get ridiculed here for saying this, but I was even willing to just break-even on my first deal, as long as I could get in the game and learn how to do it. Good luck!
"I've been making offers for properties on the MLS at asking price or above."
Don't know your market but do you see the closing price and compare?
If you're close and just lost out, then keep trying. Unfortunately, some listing brokers are less than scrupulous and give offers at the same price an edge if they don't have to split commissions. You may also need to look at your resume (done deals and funding) to make you look better than other offers at the same price. If I'm a listing agent, I'd recommend an offer 2% lower if it was 10* as likely to close.
If you're off by a bunch, then you've got a market issue and may need to recalibrate.
I get tired of brokers bragging they get plenty of offers over ask, but don't answer why they just didn't list it higher.
Also, to second poster above, don't be afraid to look at stuff that sits on MLS for a while. If its still listed, they do want to sell and are probably in a more reasonable mind on lower offers.
Yes, you'll get better odds on off-market deals, but get ready for a hunt.
@Victor Oben , have you tried using escalation clauses in your offers? I just bought one last week off of the MLS using an escalation clause. It went for $12K over asking price, but we got it for $3K less than our max on the escalation. Still a good deal because it was mispriced.
That's a good tip, might give that a try! @Owen Dashner
Owen D, can you elaborate on the escalation clause you use in your offers?
@Victor Oben sadly, I think this is typical. In a hot market many Realtors are unable to respond to the high volume.
Not because they don’t want to but because they are a “one man show” or small team.
I have found the best source for investment properties is usually a few realtors who have systems and processes in place to work with serious investors.
Find those 2-3 realtors in your area and grow a relationship with them.
I’ve found its best to clearly define your “buy box” and a good realtor will be able to supply.
@Victor Oben What market are you looking at for off market properties?
@Robb Mercado Looking in the Atlanta market currently
@Owen Dashner Hi Owen. Can u explain your “escalation clause” process? What is it and how are u using it?