Does Number of Days on MLS affect your buying decisions?

88 Replies

Hello All,

I am a new investor and looking in Upstate NY for my first rental. I am currently working with a broker and she said the below statement that really changed the way I view properties under my search criteria. 

"If the property has been on the MLS for more than 3 days - it probably wasn't a deal to begin with."

I would like to hear your views on this as well. Do you look at how long a property has been available for sale? Does this sway your decision to buy the property in the first place? I work a full time job and I find it a bit difficult to have enough time to analyze/visit/evaluate properties as soon as they hit MLS. Any other buyers with a full time job that can chime in on their process please?

Originally posted by @Mo Farraj :

Hello All,

I am a new investor and looking in Upstate NY for my first rental. I am currently working with a broker and she said the below statement that really changed the way I view properties under my search criteria. 

"If the property has been on the MLS for more than 3 days - it probably wasn't a deal to begin with."

I would like to hear your views on this as well. Do you look at how long a property has been available for sale? Does this sway your decision to buy the property in the first place? I work a full time job and I find it a bit difficult to have enough time to analyze/visit/evaluate properties as soon as they hit MLS. Any other buyers with a full time job that can chime in on their process please?

You are going to have a very hard time finding a "deal" if you are trying to buy off the MLS. You are far better off hiring a high school kid to knock on doors and hand out flyers that you are looking to buy a property.

@Mo Farraj

Personally, no, that situation wouldn't affect me. I do look for properties that have been on for quite some time (3 months +) as those sellers may be getting desperate and wanting to deal more.

As for it being 3 days or so, could just be not fit for someone's portfolio or they're funds are tied up and they're not able to execute. If the numbers work for you then go for it. Could still be a good deal.

Great point Mike, MLS is very competitive. Especially since I have a full time job, I don't have the time to compete with those doing this full time. 

Originally posted by @Mike M. :
Originally posted by @Mo Farraj:

Hello All,

I am a new investor and looking in Upstate NY for my first rental. I am currently working with a broker and she said the below statement that really changed the way I view properties under my search criteria. 

"If the property has been on the MLS for more than 3 days - it probably wasn't a deal to begin with."

I would like to hear your views on this as well. Do you look at how long a property has been available for sale? Does this sway your decision to buy the property in the first place? I work a full time job and I find it a bit difficult to have enough time to analyze/visit/evaluate properties as soon as they hit MLS. Any other buyers with a full time job that can chime in on their process please?

You are going to have a very hard time finding a "deal" if you are trying to buy off the MLS. You are far better off hiring a high school kid to knock on doors and hand out flyers that you are looking to buy a property.

Thank you for your reply Matt, I love the idea of reaching out to the people who may have a property on the market for 3+ months and starting to feel desperate. 

Originally posted by @Matt Brown :

@Mo Farraj

Personally, no, that situation wouldn't affect me. I do look for properties that have been on for quite some time (3 months +) as those sellers may be getting desperate and wanting to deal more.

As for it being 3 days or so, could just be not fit for someone's portfolio or they're funds are tied up and they're not able to execute. If the numbers work for you then go for it. Could still be a good deal.

I would say that Realtor might be shooting themselves in the foot by saying that. 3 Days or any amount of days is not a determination that a property is good or bad. That is what you figure out when you do your due diligence, ask questions, run comps, run analysis, etc... What I do know is in my area the MLS for the past 4-5 years has NOT been the place to find a deal (too many newbies and unexperienced investors that are fudging their numbers to get a deal or they just plain do not know how to underwrite a deal so the fear of loss kicks in and many times they overpay and then regret later after its too late). Not saying you cant find a deal on MLS, but that pool has too many people fishing and it only takes ONE buyer to overpay and everyone else is out of the game. I suggest turning over rocks, networking, direct mail, door knocking, bandit signs, etc... to find the hidden market sellers. That is where you will find the greatest deals! Good luck

not necessarily, I personally don't feel like it effects anything. some of the better deals, might fly of the MLS faster due to a quick observation, and knowledge of that area. but I've found good deals in our twin cities market, that have spent over 50 DOM. if they've been on the market for that long, you can usually negotiate the price more in your favor.

your best bet to finding a deal, work a few late nights, put a list together of homes you're interested in, and mail the owners directly.

utilize your broker/agent they're a free resource for you! they should have access to some sort of prospecting tool, that will give an estimated equity and mortgage amount of homes that aren't on the market, or there's an app that I have used called deal machine, which will actually send a mailer to the owner through the app itself. 

Three days is not a long time. When looking at days on market, if it has been listed for a while, they might be more flexible on their price. Most killer deals won't hit the MLS, this is when it pays to work with a good realtor who can find stuff before it hits the market.

Thank you very much Chris, took a ton of knowledge from your post. To be completely honest with you, I feel the sense of FOMO as well - especially since I am just starting out and analyzing deals. I will try and network more before getting into my first deal. 

Originally posted by @Chris Hake :

I would say that Realtor might be shooting themselves in the foot by saying that. 3 Days or any amount of days is not a determination that a property is good or bad. That is what you figure out when you do your due diligence, ask questions, run comps, run analysis, etc... What I do know is in my area the MLS for the past 4-5 years has NOT been the place to find a deal (too many newbies and unexperienced investors that are fudging their numbers to get a deal or they just plain do not know how to underwrite a deal so the fear of loss kicks in and many times they overpay and then regret later after its too late). Not saying you cant find a deal on MLS, but that pool has too many people fishing and it only takes ONE buyer to overpay and everyone else is out of the game. I suggest turning over rocks, networking, direct mail, door knocking, bandit signs, etc... to find the hidden market sellers. That is where you will find the greatest deals! Good luck

@Mo Farraj

It can still be a deal if it’s sitting. The issue is probably that the asking price is too high. If you offer lower than asking and they accept it could then be a deal. But no one else saw it as a deal because they didn’t analyze the numbers below the asking price.

@Mo Farraj if you know more about your market and can think of a creative solution then you can buy a property on the market for 600 days. For example you could find a large multifamily building and rezone it to a hotel and Airbnb it if you have knowledge of the zoning code. Otherwise, if you’re not getting creative it’s hard to get a “deal” on market but that’s not to say they don’t exist.

I don't think the days of market should be ignored but it should not be the only driver and it depends on the market.  In a hot market, a days on market more than a few days may indicate the price is too high or there is a problem with the property.  A property that has been under contract and relisted could mean there is a problem with the inspection, appraisal, or something happened with negations.  It could also indicate something fell through with the buyer.  A property listing with a low commission may mean a you have a seller who may be a little challenging or won't budge on price.  An agent will never do this but they may avoid properties with lower commission. A property that's dropping in price every few weeks may indicate the property was overpriced in the first place or the seller needs to sell. These are not hard set rules. As far as deals, not sure you will find many on MLS but the properties with a longer days on market or multiple price changes may be your best bet. Do not limit your search to MLS only.

@Mo Farraj

Depends on your strategy and how hot the market is.

Yes days on market is a huge determiner of what I am offering.  However in every neighborhood, the days on market is going to be different.  We have some locations that might fly in 48 hours or less. Other locations might be 60 days if priced right. My market is incredibly diverse from cheap to multimillions, from fast moving to very slow moving.  Knowledge of the specific neighborhood and location, and how long things take to sell in that location is imperative.

@Russell Brazil Thank you very much, great way to put things in perspective. 

Out of curiosity, what would you do in my situation with having a FT job and most worthwhile deals usually sold on MLS within a few days of posting. Would you search elsewhere? Would you try and work with a broker on more off market deals?

I am starting to have the sense of FOMO, but also don't want to just choose any property sitting on the market for 50+ days because they are available. Having a FT job is holding me back from being as active as needed to grab a few deals hitting the MLS.

Thank you again. 

@Mo Farraj no not in the least. I base my offers on what works for me. 

Long days on market might make me take notice of the property, but it does not affect the price I would pay.

@Ned Carey Thank you for your reply. What if your average home on MLS in your area is 30 days, and you've found a potential property on the market for 100 days. Wouldn't you consider this a red flag?

In my mind the way I think about it is, MLS is a pool of smart/diligent investors all waiting to scoop up deals to adjust to their strategy. If something has been sitting on the market for a long time - this tells me I may be overlooking something (condition, price, current tenants). Do you ever wonder why other investors haven't picked up the property yet? If something could make money one way or another - somebody is bound to pick it up within the average time frame of homes in your area.

Would love to hear your thoughts, thanks in advance. 

@Mo Farraj i prefer homes that gave been on MLS for 45+ days minimum or expired listings

@Mo Farraj

Wouldn't you consider this a red flag?

Yes, but not in the negative sense. I would consider it a a red flag waving saying "look at me! Check me out!"

If something has been sitting on the market for a long time - this tells me I may be overlooking something

Yup and lots of other investors too. Successful investors see value where other do not yet. Also long days on market may mean the seller is ready to come down on price.

Do you ever wonder why other investors haven't picked up the property yet?

Nope, usually it will be obvious. I just need to see if I can get it to a price that makes sense. 

You are making two false assumptions.

  1. That all properties on the MLS get equal views and exposure
  2. That all investors have equal ability to see value. 

In a competitive market like today number one is pretty true, but not at all times. In slower markets stuff gets overlooked all the time. 

One of my sayings is "good investors get the best deals from bad investors." Not all investors have the same skills and market knowledge.

@Mo Farraj As others suggested, run your numbers to determine if it's a deal or not. Use the days on market as an indicator of the seller's potential motivation to take a lower offer. Again, in the end it's only a deal if you find numbers that work for you and the seller takes your offer.

The three unit I currently live in had been on the market for over a year. The back apartment I occupy was a complete filthy cigarette reeking gut job.  The house was jointly owned by three siblings, one of which lives in the next door apartment and wanted to stay put as a tenant, so the sellers were not entertaining offers that would have her vacate the unit.  It is in flood zone AE.   There were many factors at play that could have deterred other buyers but I was able to work with the situation and we closed at 75% of asking.  What concerns me more than long time on market is watching something bounce on and off of sale pending multiple times.  

@Ned Carey Amazing gems, I really appreciate your reply sir. Thank you again! 

Hi Mo,

A property that has been on the market for 3 days can still be a good deal.  In my area, it's very common to market the property for a week and set an offer due to date and review everything then.  Each area is different and some properties will be gone in 72hrs or less. 

MLS has some great deals and the last 3 properties I purchased were all from MLS. These would be in TX. The market is competitive and I was still able to get them with upside in rehab. The absolute best deal I got was a house that was on and off the market for a year and was overpriced. I happen to be at the right place at the right time when the seller was finally fed up and wanted out. So they took my offer.

I suggest you look at properties that have been sitting for 90+ days.  Do some research find out why its sitting and then structure an offer and negotiate yourself a good deal.  In many cases, the seller is ready to take a much lower offer you just have to present it correctly.  

@Ned Carey   is so right about this

One of my sayings is "good investors get the best deals from bad investors." Not all investors have the same skills and market knowledge.

@Mo Farraj I would not base the decision on the DOM. It may be a hint that the property is overpriced or the property could potentially have some issues, but everyone has a different buying criteria. One "bad" deal for one investor may be a "good" deal for another investor. Its all subjective to your investment goals. 

There are still some good deals on the MLS by the way. I just bought one 2 months ago. 100+ DOM. Seller dropped the price to a "good" deal

@Mo Farraj ,

Do your numbers.  If they make sense it's a deal.  I've bought stuff 9 months old for 40% of list price...that's a deal.

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