Just wanted to get a feel for other people's opinion on this.
I have been making it a point to search the various listing websites (Realtor.com, etc) daily to educate myself on my market as well as look for potential investment properties. In searching, I have noticed a few listings that may have some potential for buy and hold rental. I also noticed that some of them have been listed for a long time (200+ days). I ran numbers on one of them and an average rent rate is double the mortgage payment. Are these properties worth looking at or do you feel that if they were any good someone else would have already jumped on them? Is it bad voodoo to consider properties that have sat on the market for a considerable amount of time?
My own personal thoughts about this (keep in mind I am not an experienced investor...yet!) is that I may be able to get the property at discount since it has sat on the market with no sale. Depending on how-much/if the seller is willing to reduce the price; it may turn out to be a good deal.
So again, my question is: What has your experience been with older listings? Are they worth the extra due diligence if the initial numbers add up?
Geography dictates the answer to your question. If an awesome looking property is sitting on the market in LA or Boston for 200+ days, it is probably sitting on a EPA superfund site. Your area might be sparsely populated by MFH investors.
200+ days simply means no one has bought it yet. Call up the listing agent and ask questions. Agents want you to buy the place, but this is a used car, most of them aren't going to lead you down a path that could get them sued later in life.
A big part of REI is being at the right property at the right time. Look endlessly, run a thousand evaluations and make friends with everyone you can find in the business.
I would definitely look at them. You never know what you're going to find. Have they lowered the price since the listing?
"So again, my question is: What has your experience been with older listings? Are they worth the extra due diligence if the initial numbers add up?"
I would, get out there and let's hear about your experience!
Thanks for the responses everyone!
@Michael Barbari - They have not reduced the price on this particular property.
From what I am hearing, the age of the listing shouldn't matter as long as the deal is right. I just wasn't sure if I should be screening out older listings and only focus on newly listed properties.
The property I own ( I've only got one so far :) ) had sat on the market for a while. I think it was originally listed around $50k. It wasn't worth $50k to me, but it would make a nice little rental. It wasn't a big house and it needed very little work. I pretty much just added smoke detectors, cleaned it real well, added some shelving and smoke detectors. I offered I think high 20s, and we agreed on 30,900. With 2k for closing assistance. Perhaps no one wanted to offer the seller what the true value on the property was... or perhaps the seller was just sick of sitting on it. Either way, I got a great deal!
YOu have to ask yourself, why the properties haven't sold. Is it location? Is it condition? Price? Maybe a combination of all the above.
Nothing prevents you from making an offer. You can offer whatever you choose. The seller can reject, accept, or counter. Doesn't matter the number. For me, I never really pay attention to list price, except when it is ridiculously above what my numbers say I need to offer. I have gotten properties for 53% of list price before, so you just never know.
But remember this, your numbers are your numbers. Stay within them!
Definitely a strategy to consider, but I'd also look at your idea in a different way:
What I suggest is looking at expired listings in areas that you want to invest. To do this, find a local real estate agent to work with and ask them for the list of expired listings. Then mail letters to properties you would want to buy, and make them offers if/when they call you back. This way the agent's commission is not involved in the sale price for the seller and you may get an even better price. Find their motivation for selling (they're very frustrated at this point), and then use that in your offer/negotiations as well. I've found a few awesome properties using this method.
If you end up buying one, I'd also pay the agent that gave you the list a little money for their time for the list. Or just get your license as well :)
Old listings may represent a good opportunity to pick up a house at a good price. However it could also mean its way overpriced or there is some serious issue with the structure like a bad foundation. It could also just be the lay out is bad and no one likes. Simple as that. You just never know but old listings can present a good opportunity but that is why you want to do a complete and good job of your due diligence. There maybe liens on the house no one wants to deal with , any number of things and yet there could also be nothing wrong with the house other than no one likes it or wants to buy it. It could also mean that there are simply not buyers in that area in which case you might think if you buy it and your strategy is to fix it up and sell it then you may have the same problem of not being able to sell it. You just have to be able to evaluate the property the location, check your numbers for what you want to do with the property and make your own choice.