Ignore MLS leads permanently??

Question

Should MLS leads be completely avoided for real estate investors if they are looking to get a good deal?

Tony Marcelle · Answer

@Andrew Johnson Those homes that sat on the market for 400 plus days are standard sales by home owner and some are foreclosures. Do you walk through the properties all on your own when you go analyze them in person? Some people might over look the fact that those pretty pictures posted on the MLS might not be the same thing they would see in person for those 400 day old homes.

Andrew Johnson · Answer

@Tony Marcelle I don't think you'll ever see a wholesaler have a property for sale for 400 days.  I'm sure it's possible but their contracts are usually of a much shorter duration.  They either find a cash-buyer or back out of the agreement.

As for MLS listings on the market for 400 days, something is always wrong.  That doesn't mean there isn't a "right" price for it but if it's been on for 400 days with no price reductions you could have: 1.) an unmotivated seller, 2.) property is in a flood plain, 3.) there's issues like lead-based paint/asbestos/etc., 4.) foundation is shot, 5.) etc.   You could come up with 100 reasons but after 400 days on the market most local realtors will know the backstory.

What's also more common that you think is that the cost to rehab a property just isn't worth it.  You buy for $100K, it needs $50K in rehab, but the price ceiling on the neighborhood is $125K.  The seller can't sell below $100K because they need that to payoff the loan and don't have the money to do it out-of-pocket.  So the property sits.

And, for what it's worth, I never trust pictures.  About a month ago I went and looked at a property that needed some rehab.  Pictures had the property looking rough but it was 10 times rougher in person.  There was an amateur add on, floors were sloped (no need for a level, you could just see it) and spongy, there were about 3 different types of siding, etc.  There were 100 things that didn't show up in the pictures because the pictures are there to market the property.  I can't fault the seller, realtor, etc. as that's their job.  But it took about 15 minutes for me to go from: interesting, to a little worse than I thought, to this is getting dicey, to YIKES!

Tony Marcelle · Answer

@Jade S. What is an excellent exit strategy when coming across such homes like the ones I mentioned?

Shawn Ward · Answer

@Tony Marcelle I believe then can be negotiable yes, but they will always look for the best deal, even with EMD. We usually use 5%.

Jason Hirko · Answer

@Tony Marcelle Of course not. Set yourself up a search to send you houses that say 'as-is' or 'owner financing' or 'investor' or 'handyman' etc. But no, I wouldn't just sit there and scroll through every listing trying to find deals either

Tony Marcelle · Answer

@Shawn Ward Are earnest money deposits negotiable with MLS listings of standard home sellers? MLS foreclosures charge  a certain amount that is pretty high.

Jade S. · Answer

Not by a long shot! If used as the ONLY source, yeah, you'll get frustrated fast and think "It overheated! No deals".  But as one of several avenues of deal flow, you should at least monitor it.  Sometimes MLS deals fall out of escrow for a number of reasons, and sellers need to close quickly.  Or all cash offers on a new MLS listing can get a seller's attention.

Tony Marcelle · Answer

@Andrew Johnson I came across some MLS listings that have been on the market for more than 400 days. The homes are in great condition and what looks like nice areas the houses are located in. The street view show nice homes where the listed houses are located. What could be the reason the homes are not selling? My guess is it could be the location not attracting buyers or the sellers have not lowered their prices lower enough. That is just a guess. I am sure wholesaling stale listings that have been on the market for over 400 days is out of the question. Is it?

Ignore MLS leads permanently??

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