DOM as sign of a bad deal?

Question

Hi investors,

There's a multiunit I'm interested in, and for which I am able to make the numbers work, but it's been on the market for 150+ days. Does this mean my numbers are wrong and it's a bad deal? It's an active market; why wouldn't someone have bought it?

Thanks,

Alison

Jacob A. · Answer

If I see a house that's been on the market for a long time the first thought in my mind is "There's an opportunity to low ball the crap out of this offer."  Don't immediately dismiss it.  Do your due diligence if you think you might like it, figure out your max offer price and go for it.  You never know what someone will say until you ask.

Rolanda Eldridge · Answer

@Alison Michel ...Due Diligence is key!...I prefer to look at properties with 90 or more DOM...less competition and more opportunity(usually can get cheap)..Work it to your advantage, by submitting offer with supporting docs of repairs, etc and negotiate...

Ned Carey · Answer

You have gotten good advice so far.

The size of the multi-unit is a factor are we talking 2-3 units or 150 units. Large commercial deals take time to evolve.

Also where are you talking about.. Close to DC like silver spring it probably overpriced. (But as already said DOM can be a negotiating point) If you are talking about the Baltimore area long DOM wouldn't surprise me.

Often asking price has little to do with whether there is a good deal or not. Properties often ultimately sell for much less than asking price. Motivation is much more important that asking price.

Ophelia Nicholson · Answer

The answer is two fold for me. In our area DMV - usually 150 days means the property is overpriced especially if the selling agent is also the seller- they probably are trying to get every dime they can.

Secondly- Its either the numbers work or they don't - If you are able to make the numbers work then they probably don't really work but you have figured out a way to say its a good deal.

Its interested because the more you do this the more you wonder how you made the numbers work when you first started. So the numbers might work for you but a more seasoned investor might go yeah this doesn't work for me. I have to wait for a price drop or find something else.

David Krulac · Answer

@Alison Michel

DOM can be used as a negotiating tool to extract a much lower price.  Recently bought a property on the market for over 100 days. I was able to buy it for around 40% of original listing price.

Alison Michel · Answer

Thanks Ophelia Nicholson

David Krulac · Answer

In any event,

"If a property has not sold in 90 days and has been properly advertised and exposed to the public, then the price is too high."

There was recently a house on the market for more than 100 days.  They had 41 written offers on the property.  I never heard of 41 written offers on 1 property.  It ended up selling for 41% of initial asking price.  Funny how that worked out.  As Captain Obvious would say, "I think the property was overpriced to begin with."

Nicole A. · Answer

Sometimes also with multi-units--besides it possibly being overpriced--is that a multi-unit may usually only interest other investors while a single family home interests investors and potential home owners.

If the numbers work, they work. :-)

DOM as sign of a bad deal?

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