If you are a real estate investor than the words “there are no deals on the MLS” have likely come out of your mouth in the past year or two.
This is not a national frustration, but in any market that is remotely hot the statement rings true. The thing is, you can always find a deal somehow, even if it takes a lot of work and some time. I want to talk about two methods that give you the best shot of finding a deal on the multiple listing service (MLS).
How to Find Real Estate Deals on the MLS
Properties listed more than 90 days
If a property is not selling there is usually a reason. That reason gives you the ability to negotiate the hell out of it. When you see a property that has been sitting on the market look into what could be the reason. Is it just priced to high? Or is there a major item in need of repair that is scaring off the retail buyers.
Either way, if a problem is present that is an opportunity for us as investors. Solve the problem and make it clear you can close, both are enticing to a seller that is likely motivated at that point in time.
Be first and aggressive
On occasion something hits the market that makes sense. That is the issue though. If it is a good deal people will flock to it and a bidding war may ensure, especially if you have to battle retail buyers looking for a home. In a case like this you must strike fast and with a strong deal.
Cash purchase or a large down payment with pre-qualified financing already in place is basically a must in this scenario.
One of the last properties I purchased in FL was attained this way. As soon as the property hit the MLS I was all over it. Went to view it just two hours after it listed and had an offer in before the end of business that was strong and had a shorter than average closing date.
The owner received two other offers that day for $5K more than mine. However, both were only putting down 3.5% and had 45 day closing timelines. I was putting down 25% and closing in 30 days or less.
The issue with the other offers was the risk of an appraisal not coming in where needed, given the higher purchase price and lower down payment. It was a risk the seller did not want to take so they went with my offer and it was a good thing they did because the appraisal came in low. In fact, it was $1k lower than my offer price, which I used to negotiate down.
I’ll be honest, the appraisal was not a good one. My comps had it higher in every scenario I could run, but it worked out in my favor. In the end, the seller never would have made it to closing with either of the other buyers.
Also, in many of these scenarios a seller will go with the highest offer only to see it fall through and then the agent will come knocking at your door a month later asking if you are still interested. I have gotten a few deals this way an the best part is I got them at the price that made sense for the property to cash flow!
Always be sure you run your numbers through the property calculator so that you buy right!