Is buying a house sitting on market long time a bad buy?

Question

I have one duplex and am focused on low income housing and ready to buy another property. Now, when looking at new properties that I'm interested in buying the ones I come across and go look at always seem to get bought up right away. I don't have the capital to make such quick buys. I think this is a good sign I know what is and isn't a good deal. What I'm concerned about is seeing houses that have been listed for awhile. I have seen a few houses I like and the numbers seem to add up but I'm always thinking there has to be something wrong with it, bad area, etc. Should I always stay away from listings that have been up for a long time?

Thomas S. · Answer

If you know your market and how to assess a property nothing is off limits. You simply need to find out why it is not selling, decide if you can work with the issues and offer a price that works.

99% of properties that do not sell in a reasonable time period are overpriced.

Lynn McGeein · Answer

This is why you need to become very knowledgeable about the area where you invest.  We have narrowed it down to even specific streets in neighborhoods we like.  If you know the neighborhood, then you understand when it's just an owner wanted way too much to start or the tenants left smelly garbage and other deterrents for anyone who saw the place as they didn't want to move.  There are many reasons a house can sit on the market.   Some of our best purchases were houses that sat for over a year on the market as the owners thought they were worth a lot more than the market would bear.

Linda S. · Answer

@Michael Morris,

We LOVE finding houses that have been sitting on the market for a long time, right off the bat--it shows the seller will be desperate and will likely take a lowball offer.     To me, it's a sign that you can get a really, really good deal because everyone else is passing it up--  just know why and make sure you're qualified financially to deal with the why.

The reason a lot of properties don't sell is because they are overpriced, or won't qualify for a mortgage and it limits to only cash buyers.

Account Closed · Answer

I recently came across a duplex, that is close to a university.  It has been foreclosed and on the market for 11484 days (about 32 years.. if the number is correct.)  It is an old building, but has been remodeled inside.  I often wonder why it hasn't been bought yet, since it would be great for student accommodations- 6 bedrooms.

David Faulkner · Answer

Have they been dropping the price periodically to get it sold or has it been sitting on the market all this time at the same price? If they are doing periodic price drops that is a good thing as it may indicate that they have some motivation to sell it ... in that case, I would see if there is a pattern to the price drops, as in they are dropping $10k every 3 months or something like that ... if that is the case you can time your offer as the price gets closer to a good deal, put it in just before they would normally drop the price, but a bit lower than what you suspect they will drop it to. If they have been sitting all this time at the same price, then I'd just keep an eye on it ... if you want you can put in your offer, and then just resubmit the same offer semi-periodically.

JD Martin · Answer

Time on the market has nothing to do with whether the property is a worthwhile buy or not. I have bought properties the day they hit the market and I have bought properties that were vacant and for sale for almost 2 years. Some sellers will get desperate if they sit forever, but not all - there's a house right next door to one of my properties that has been on the market for over 5 years, vacant all that time. The seller is insistent on waiting for a miracle at the price he's at.

Frank Chin · Answer

My wife was a RE agent for a while after college looking for her first job. One interesting story she told me was one obstinate seller, who is non wavering on his price. This was going on for months.

What the seller didn't understand is why his house is not selling with all the buyers coming by taking a look. His take is, he got a "hot house". But the truth was, they sales agents are using his house as an overpriced house to sell other houses. So you bring a buyer to see his house, then the other house you're trying to sell, telling the buyer, "don't you think this is a better deal"?

So I asked her "does this obstinate guy know this"? She told me "no" because they were having to much fun tormenting him.

Curtis Bidwell · Answer

@Michael Morris Time on market is not generally a consideration. WHY it is still on the market is.  My very best deal was on/off the market for 1.5 years and had run concurrently for well over 6 months.  (You can read about it here: https://www.biggerpockets.com/forums/223/topics/26...)

As has been said, know your market well, values, rents, etc.  Make your offer based on your knowledge not their asking price.  Then do your due diligence. Get previous inspection reports if available.  Get qualified inspectors to help you evaluate it. There may be underlying issue keeping it from selling, or it may just look unappealing to the typical buyer.

Often times they just owe too much and are unwilling to let it go for a loss.  They may need some instruction to show what it's costing them and what the market it.

Michael Morris · Answer

I have researched the area and it is a neighborhood I want to invest in. The neighborhood is turning around and there are multiple flips going on around it with in a 4 black radius. From your input it seems that the reason may be the owner is unwavering in his asking price. Hasn't lowered the price the entire time it has been listed.

Is buying a house sitting on market long time a bad buy?

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