3 MLS Rehab Deals Under Contract in Just Over a Week

Mike: Welcome back to the flipnerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now let’s meet today’s expert host.

Jim: Hey everybody, Jim Huntzicker again. I’m the founder of Real Estate Investor Academy and today I’m your host for the REI Classroom. Now, today’s topic is a great one. It is how . . . I’m just going to tell you a little bit of how I got three deals under contract out of the MLS in a market with very low inventory in just over a week.

Mike: This show was sponsored by passiverental.com.

Jim: And, so, because I always hear the same thing, “there is no big deals in the MLS or the MLS is too competitive.” I hear that over and over and over again. I hear it when inventory levels are high and I hear it even more when inventory levels are low. Now, I’ve got a lot of irons in the fire like many entrepreneurs do and so, recently I sold a few of my rehabs and I did not realize that I did not have anything in my pipeline just . . .
Again, I got a lot of irons in the fire and I’m not proud of that, it’s not one of my strengths, if it’s anybody’s, but still I’ve rehab crews that work for me that I’m like, “Crap, I need to get some deals quick.” So I said “All right, I’m not going to do anything else until I get three more deals.” And, you know, it’s not easy for me to do nothing else, but I did get three deals and a contract in just over a week. So, I was able to secure every property I needed out of the MLS in just over a week and I went back to all the other irons I’ve got in the fire. So, the key to that is, you know . . .
Again, I’m in the Northern Illinois market, I’m actually just outside of Chicago. We have one huge MLS for all of Northern Illinois, which is awesome, which is also can be kind of daunting for new investors because it’s such a big MLS, you don’t know kind of where to start and how to do it. But if you have all your searches dialed down into . . . you know, we just use the remarks, we put specific keywords out of the remarks and geographic searches. That’s how we pull everything, so it makes your life a lot easier when you’re pulling stuff that’s only, you know, it has distressed sales written in the remarks or that type of thing.
But anyway, the biggest key to the two of three of these deals was speed. Now, two of the deals were estate sales, actually three of the deals were estate sales, but two were brand new listings and one had been on the market for about 44 days. Now, the one that had been on the market for 44 days was kind of a deal that I went fishing for a little bit, because that’s not usually ideal and it was priced about 10% higher than I could pay, so it’s not always easy to do.
It was vacant though and had been on the market for 45 days, so I go to the house to see it and I say, “Okay,” and it’s also right by my house,” which I love that stuff because I always say I’m going to stop by the properties more. But funny thing, I never do, even though they’re close to my house. If you have a good crew in place that gives you updates, that you can trust, that can send you pictures of what’s going on, you don’t have to do stuff like that. I usually go to my rehabs about three times total, when I buy them, in the middle and when I sell them. That’s really it. I have a great crew in the middle that takes care of everything else.
So, the one that was on the market for 44 days, I go to see it, I like it, I call the agent like I always do to feel them out, and he tells me that she’s rejected four offers. Now, most people, including a lot of people, my students that I teach this to, they’re right there and completely discouraged by that and say, “This is not going to work,” right? Well, that’s the wrong thing to do because just like anything, it’s all about timing. It’s like Einstein’s definition of insanity, right? You can’t keep doing the same thing over and over again and expect a different result. Well, if they get the same offer over and over and over again, they can’t expect a higher one all of a sudden, right?
So, sometimes it’s the second offer, sometimes it’s being the fifth offer, but when I hear that a seller has rejected multiple offers that gets me excited because I think, “Oh, maybe I’ll be there at the right time now,” and maybe not, you know, but that’s part of these processes is usually you’ll get about 10% of the detailed, structured offers you put out at the MLS.
So, what I mean by detailed, structured offers, you look at them, you evaluate them in your office, you have a team member do that, you decide you’re going to go out there and see the property, you go see the property, you run a property [inaudible 00:03:42] estimate sheet on it. It shouldn’t take you any more than 10 minutes totally at the property to figure this out, then have an idea of what it would cost you to rehab that property.
And then you call the agent to feel it out, to build rapport, that’s part of that process too, because if you’re going to submit a lower offer than the list price, you’ve got to have the agent like you. They’re not going to like your offer, you know that already, so if you can start building some rapport with them up front when you give them a call to feel them out, that helps go a long way.
So, yeah, just making some jokes and not even, you know . . . When I call at first I’m not even usually talking about the deal, I’ll talk about whatever else, something about current events, whatever, just the weather, like, something to get them going. If they mention something personal, I’ll talk more about that. People love to talk about themselves. All I’m doing is building rapport so that the agent likes me. That’s it.
So that happened here, I was told that there was multiple offers that were rejected, and when I submitted my offer, this was listed at 250, she wanted $50,000. My offer was 225 and that was my highest, best I could do. And he said she just rejected an offer. The seller just rejected an offer of 235, 10,000 over my offer. He was like, “Do you think you can come up to 235?” and I said “No, I told you this is my . . . I cannot pay 225 and one dollar, I’m pushing the limit here to 225.” And that’s how you explain your limit. You say, “If you came back at 225 and one dollar, I can’t do it. I can do 225 and that’s pushing it for me.”
So, they came back at 230 and then they accepted my 225. So, that was just some better timing, a month before she had an offer of 235. Now, why the agent didn’t call the 235 back? That’s beyond me. Maybe he did. I have no idea, but for some reason they don’t tend to do that because you know what happens then? Well, that means the agent may cause problems for himself and his commission and when that comes in. That is really the reason why those agents don’t call back at these older offers, because they should call them all, but anyway.
The other two deals were both brand new listings and I’ll tell you the key to them was both communication and speed. Speed because they were priced well, both of them. One was way under, and one I paid list price for it, one I paid over list price for. So all these three properties, the first was as I explained 10% under, the other one I was at list price, which was 325 and that one. And that one, there was a commission on it and it made sense for me to put myself down as the agent because it was a 3% commission, and so I took a 3% commission. So, even though I paid 325, on paper I actually paid 315. Three fifteen, 250 I believe that is.
The other one was listed at 279. I could have paid 325. They way underlisted this property, but based on my conversation with the agent, and I poke, and I ask probing questions . . . You know, you want to ask these questions in kind of a joking way sometimes but you need to know and basically the agent told me where I needed to be. I was listed as the agent on this. She was not getting the commission, because she was not interested in doing that because I did offer it to her, because I was trying to get some more information, but she actually gave me enough information anyway.
So, my offer was 295,000 on a 2799 listing, but there was a commission on that so my price that I got it for was in the 270 range, 273 I believe that was, 274 . . . But anyway, the point is, the agent basically with enough questions told me basically where I needed to be, and I could have gone to 325 on that. So, both of those deals were new listings, multiple offers, and I won them both, and I was on the 279 when I was over it at 295,000, I was the highest offer there. That’s what she said it would take to get that particular property.
But on the other one I was not the highest offer. In fact, at list price, they asked me if I could go up because they saw I was the agent and getting the commission. They were factoring in my money for me, so that was very nice to them to do, but I could not offer a penny more. I stuck with the same dialogues that I always use telling them, “Hey, those higher offers, they’re probably aren’t going to waive the inspection and they’re probably going to ask for a large inspection credit, all kinds of stuff like that, that you’re planting these seeds telling the sellers’ agents. So the sellers find out about what other investors may do, and so that is where the highly communication comes in and it’s extremely important.
So, I can’t stress enough how important it is to build rapport with these agents and call them as soon as they list and feel them out. Ask them as many questions as you can without being too probe-y and don’t be too direct or don’t, you know, certainly don’t be aggressive because they’re going to back off then. But just call them and build rapport, and just kind of talk to them a little bit. That is how I got three deals under contract in just over a week in a market with extremely low inventory, when everybody in my market says the same thing, there’s no good deals, or they also say the MLS is too competitive.
Now, again, it can’t be that but anyway, I hope you found this information useful. For more information from me you can reach me at www.realestateinvestoracademy.com and we’ll see you in another training. Bye for now.

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