Almost every real estate investor has access to the Multiple Listing Service (MLS) in one fashion or another. Some investors work closely with a couple of real estate agents that feed the investor information from the MLS on a regular basis. Others obtain direct access to the MLS without an agent's license by signing up as one of the agent's assistants. Other investors go the whole mile to become licensed agents with a major perk being they can open their own MLS account.
Additionally, when you use sites like Realtor.com or Redfin.com, you are indirectly accessing the MLS. Without a doubt, the MLS has the largest and most detailed listings of homes available for sale. It is also much more convenient than "driving for dollars" or constantly scanning craigslist searching for great "for sale by owner" deals.
The problem with the MLS is that everyone is looking there. It’s the largest pool of available properties, so trying to find a good deal can feel a bit like trying to find the proverbial needle in a haystack.
However, as an investor, there are three actions you want to take to maximize your use of the MLS.
Be the first to view new listings. Most will be the mundane full retail priced offerings that make up the bulk of new listings. But the occasional distressed property that needs to be sold ASAP will pop up and you want to be one of the first to view it and possibly make an offer. In a competitive real estate market like the one we find ourselves in today, these properties go FAST. You need to be faster than the other guy.
If this is indeed a distressed sale, you can get a "yes" before anyone else even sees the new listing. I know an investor that bought a nice inherited house for 40% of market value because the seller was in a serious bind. The seller was way behind in child support payments and was going to be sentenced to a jail term in four days if he didn't come up with the money. That was a real motivator. I see this as a win-win-win solution. The seller stayed out of jail, the kids got the financial support they needed, and the investor got a good deal.
Have your funding in place. These deals need to close fast. This is not the time to be asking for seller financing. These people need money. They are not in a position to lend money. Whatever your funding source is, make sure they are ready to go so that you can get to the closing table in a few days rather than a month or two down the road.
Set your criteria. You will pass on 99 percent of the new listings that you see first. Create a strict criteria that enables you to briefly view these listings and quickly conclude these are not for you so that you can move on looking for the ones that fit your criteria.
Whether you are working through an agent or have direct access to the MLS, use automated alerts to notify you when a new listing has popped up. Occasionally, you can get a notification slightly before a new listing even hits the MLS. This is possible if you are working with an agent that has a desk in an office. Your agent or an associate agent might let you know about a great listing they just took in are about to upload to the MLS.
When you want to be first, make offers without going out to look at the property. You're going to make a lot of offers before you get an acceptance. Something like 20 offers per acceptance is typical. You can't look at every one of these houses. What you need to do is include a contingency that allows you an out if the property doesn't meet your needs. You can hold off physically viewing the property until negotiations have started.
There is also an advantage to making the last offer. Without a doubt, it's usually the last offer that completes the purchase. Look for properties that have been on the market for 90 days to 6 months. Today, these are few and far between but they are still out there.
The seller may be struggling to make two house payments or being held back from completing a purchase on the next house they want to move to. Any previous potential buyers have likely moved on by this time. You don't even have to match or beat the previous offers. You just need to be able to close fast.
The third and final MLS tip for investors is that this is a time to stack the odds in your favor. Hopefully, you're familiar with the real estate investing funnel. Briefly, this is when you load the top, broad end of the funnel, with as many potential deals as possible. You make offers on all of them. Most of them will be rejected and fall by the wayside.
Some will make a counter offer and you'll want to perform some more analysis to better understand the potential. You may or may not decide to make another offer.
Finally, some will come out at the small end of the funnel. These are the deals that you close. Don't be surprised if you make 30 offers before closing on one. If you want to buy more investment properties, make more offers.
The fact is, finding good real estate deals on the MLS today is tough work. However, it’s not impossible for those willing to hustle to find them. Rather than sitting around waiting for good deals to fall into your lap, get out there and either be the first, be the last, or make the odds work for you until you invest in your next property.
Please leave a comment if this article was helpful or if you have a question.
Author bio: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for 10 years. He also draws upon 30 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest. With the Pacific Ocean a couple of miles in the opposite direction.