Properties on market for long time..What should I look out for?

Question

I came across a property on Realtor.com that looks like it could be a deal. But that gets me thinking, why hasn’t a local investor bought this? What don’t I know? It’s been on the market for almost 5 months.

Listed at $35,000 ARV around $80,000 - $90,000. I looked at recent sales in last 3 months on comparable homes in same neighborhood, not the “zestimate.” Lots of pics and looks like a cosmetic rehab. What are common reasons a deal that looks good on the surface would sit on the market for so long?

Stanley E. · Answer

Hi Account Closed. I must admit, to me the longer the DOM, the more excited I get about a property. If it fits with my other criteria then I investigate further, conducting my due diligence of course. The longer DOM gets my spidy senses to going off because I am in hopes that this will provide me the opportunity for better negotiation. I think here, asking the questions and conducting your due diligence is key.

Randy Thomason · Answer

Hi Jonathan,

Could be many reasons or not a good reason too.

Possible reason to be wary of:

foundation issues

termites or other wood destroying insects

war zone

sink holes in the area

noise

smells from a nearby business

bad layout inside

But then again I have bought some off MLS that were great deals but were on there 6 months or more. Just go and keep your eyes, ears and nose open for issues. Ask the selling agent why i is not selling and if it has been under contract before and fell thru. Some won't say but some will have diarrhea of the mouth and tell you everything.

In this business you MUST adopt the motto of - You don't get if you don't ask.

Go look, offer if it looks good , subject to an inspection. Seeing how its been on market that long I would be making a very low offer and they might accept or at least counter you.

Happy Hunting!

Randy

Tyler Rowland · Answer

I can think of 3 based on the market I am in.

1. Foundation issues. I am not sure how building is in other markets, but certain subdivisions in Cedar City Utah are prone to major settling. And people avoid those neighborhoods even if the house has no foundation issues.

2. The Local market is declining. Ken McElroy stresses studying the local market in his book The ABC's of Real Estate Investing. Perhaps a large company has moved on to another state or has closed. (i.e. Sears and Kmart)

3. The house is awkward. Its on a weird piece of land, or right next to a railroad track. I looked at a house once that was in a great location, and aesthetically pleasing, but it was not what it seemed. They claimed it was a 3 bedroom 2 bath house, and it was priced as such. But when we walked through the house we discovered that 2 of the 3 bedrooms were really just one bedroom split in half by a glass door and only one half had a closet. So it was a 2 1/2 bed 2 bath, and overpriced.

If you find out why it has been on the market for so long, let me know. I would love to know!

Cassi Justiz · Answer

One thing I've seen a lot with properties like this in my market is that they are going through a short sale, probate or court dealings or something else along those lines that delays the process of purchase. Sometimes they will have a contract in place but leave the listings "active" for months while they sort out whatever issues there are. Most of the time you won't be able to see this info on the buyer side, but if you have an agent that you are working with they can look in the agent remarks section and possibly see what is going on.

Account Closed · Answer

@Cassi Justiz @Tyler Rowland @Randy Thomason

Thanks for the input. I have a better idea of how I should continue. I forgot to mention it’s listed as a foreclosure.

Matt McGuire · Answer

I bought a 4-plex that I found on Realtor.com that had been listed for somewhere around 190 days. Frankly I don't know why nobody else was interested in it and it did make me nervous. But I ran the numbers again and again and they checked out. I got all the inspections, did my homework, did the deal. Now its cash flowing over $600 a month and has been a good property.

Brandon says in the webinars all the time that every property has a home run number. So if the numbers make sense and you factor in any big problems like foundations then do it. The one exception to that would be the war zone. If you can't place tenants that will pay rent you are in trouble. So make sure to understand the area that its in but otherwise don't worry about what other investors are doing.

Properties on market for long time..What should I look out for?

Properties on market for long time..What should I look out for?

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