Today’s REI Classroom Lesson
As Jim Huntzicker explains, there are deals on the MLS that get hardly any views and some that have been sitting there for hundreds of days. These homes … can be your opportunity.
REI Classroom Summary
Jim talks to us today about searching for homes that have been on the MLS for over 300 days (or a similar number that works for your market) in addition to a few other tricks so that you can search for the right deal.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
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: Hi everybody, it’s Jim Huntzicker, founder of Real Estate Investor Academy, and I’ll be your host for this REI Classroom. Now, in today’s training I’m going to go over fishing for deals in the MLS.
Mike: This show was sponsored by passiverental.com.
Jim: It’s one of my favorite things to do. It’s kind of how I got my start in the business when I didn’t really know what I was doing yet. One of my first deals actually, I ended up getting 31% off the list price. It was listed for 440, I bought it for 300, kind of by mistake because I was desperate. I actually made that offer expecting them to reject it. But I was desperate because I own my first rehab that I knew I was going to lose money on because I didn’t have education. I hired the wrong contractor, I had the wrong partner. I did everything wrong because I didn’t have the education.
Now, even though I work with investors prior to this as an agent I thought I knew what to do and I didn’t. So when I put this offer in that was listed for 440 at 300, I expected them to reject. And in fact, when I got the offer together I wasn’t surprised as the agent was that they just accepted my offer of 300, and now, I had $5000 in earnest money on there and I also had to come up with the other $295,000 both of which I didn’t have. But, if there’s a will there’s a way, and I did go find a private investor who became an equity partner on a deal.
Now, my best deal since then was actually 32% off. And what you’re looking for in these deals when you’re fishing the MLS which again, if I can’t find a deal immediately I just go fishing. It’s easy. There are always deals you can find when you go fishing in the MLS and you’re looking for a few things. You could start with market time. I usually start with anything over 300 days. And then you go through those and then you look at the tax record which is, in the MLS you can always see the tax record.
And on that tax card it will tell you what they owe, when they bought it, what they paid, if there’s a mortgage on it, for how much, when they took it out, all the information you need, or if there’s no mortgage. If it’s been paid off for a long time there’d be nothing down there.
So I start with market time. Then I look for full equity or lots of equity. Those are deals, so I have a VA go through and that’s how we pull all that information. But there’s lots of other ways you could check as well as far as different searches. There are searches where you could put “motivated” in the remarks because lots of agents will say motivated seller. By the time it gets to 300 days they say, “Hey, what could you put in the remarks that would help people know that I’m willing to sell?” Or bring all offers. Those kinds of remarks that we see in the remarks, very, very important.
So that’s what you do. You take your geographic area you like the buy in wherever that may be and you go fishing. You start with market time and you can go back to 200 days of market time if you’re not finding a lot of 300. But, usually, most MLS’s now are big enough where if you put 300 days of minimum market time or more, you’re going to have plenty of listings. And then the key here is once you find a property you’re going to look at it.
Now, this is where it gets a little tricky because you have to . . . it’s not like you just go in and, again, remember, these are the ones that people always ask me, “How do you get your low ball offers accepted?” Well, I’ve never submitted a low ball offer, but because of where it’s listed we don’t know if the seller thinks it’s the low ball offer or the agent thinks it’s low ball offer.
I mean, on a one deal that I got 32% off of they listed that for 550 originally. It was down to 400 and I bought it for 273. And the funny thing about that is usually it takes a couple of days to get that kind of discount. This one happened in 10 minutes after I . . . I’ll tell you about how I did the dance that led up to being able to get that because it’s not an easy thing to do. It takes a little finesse. My wife actually used to call it my acting debut because prior to us having kids she’d be in the car with me. And I’ll explain about that in one second.
But, anyway, so these deals are, going to the house and seeing it. So you’re just calling and schedule a showing and this is what I was going to say. So that particular property, now, those people, it was paid off, it turns out all those kids had money. The agent, they would’ve taken $300 for it 300 days ago, but when you bring an agent into your house, and again, the average one does three deals a year, so when you bring an agent, maybe you get a good one, maybe not, either way.
The point is, if a real estate professional tells you this house is worth 550 and you’re willing to take 300, are you going to say, “No, no, no, just list it for 300. I don’t want the money.” Of course, you’re going to list it for 550 because anybody would. But when time goes on and time goes on and they realized the property is not worth as much as they said it was, well, now, it’s hard for them to ask for these major reductions because they’d look like an idiot.
So that is when the fishing comes in and that’s when the dance comes into play. And so the dance is very important. So here’s how the dance works. You call and schedule a showing and you go the house, and you run your property repair estimate sheet, you’re in and out in 10 minutes like usual. And you call for the agent for feedback, or you can give them feedback via email like, you really love the house, love the neighborhood, you would love to do a rehab here.
This house is perfect. But you’re just trying to crunch their numbers and bring as high of an offer as you can. Their price is close to 400 and you’re going to be closer to 300. You just got to drop some seeds. Plant some seeds out there. And that’s really it. You can call them on the phone or send them an email for the showing feedback, and that’s just the start of it.
And then a couple of days later you call and you schedule another showing. But this time, guess what? You don’t go. I already know what I could pay for it. I already went one time or my project manager went one time. I know what I could pay for the house. But, if they’re listed at 400 and I can only pay 273, it takes a little finesse there.
So you call and schedule a showing and then after the showing you call the agent and say, “Oh . . . ” this is where my wife would say, it was my acting debut because I would call and be like, “Oh, I love this house and you guys are very . . . do you think they’re open to an offer that’s lower than 400 because I’m going to be closer to, I’m really going to be closer to 300. I’m going to go back to my office again and run my numbers.” I didn’t even go to the showing this time. They think I did.
So what do they do? They call their clients and say, “Hey, that guy Jim, he went again. He loves this thing. He’s going to bring us a cash offer.” And then I wait three or four days, and I call and schedule another showing. And I’ll call the agency, “I don’t . . . my offer is not high enough, I got to see if I can take some stuff off the repair list. Let me go see it again and I’ll call you afterwards.”
So I call and schedule another showing. But I don’t go. And people are always asking, “Well, don’t they have electronic lock boxes?” Yes, but they never ever get checked. In fact, one time an agent did call me on it, it’s rare, and all I said was, remember this because it’s important. Now, I had to work this on the fly, so you have a bonus right here, is I said, “Oh, the front door is actually unlocked, believe it or not. So I know the house is vacant, I locked it on my way out but I didn’t even need to use the lock box.”
So there’s your little tip of how to get around that. But, you do this three or four times and the goal is to get the agent to ask you for your offer. So “Hey, just give me anything, but we’ll put this thing together.” That is the goal of the dance. So that’s what you’re trying to do and every time you schedule a showing what does that agent get to do? They get to call the seller and say, “Hey, he called back again. This guy loves this house.” They finally have something good to say after 300 days on the market.
So this is very powerful stuff. And that particular deal I’m explaining, literally, usually it takes a couple of days when I submit an offer that much lower than the listed price, but that one is literally 10 minutes. The agent, I submitted it, she said, “Oh, you said you were going to be close to 300.” But in the 300, I never said I was going to be in the 300, I said I was going to be close to 300 which this is. It’s 273. It’s closer to 300 than it is 200. You were assuming 400, weren’t you? But I didn’t say that because that would’ve pissed her off. But that is how it happened and literally she submitted the offer, 10 minutes later they accepted it, we closed two weeks later.
So when fishing for deals in the MLS there is so much opportunity in any kind of market, you just need to know what to look for. And most importantly, again, start with market time, but houses that are paid off are gold. That is absolute . . . because those people, depending on how many heirs are in the estate is absolute gold because when they have that market time they were counting this money all the time. But guess what they’ve been doing now for the last year? Paying taxes.
And so depending on what your taxes are, in Illinois, ours are outrageous. So taxes on that particular house like 15 grand a year, that’s right, $15,000 a year. So they were paying that, that year, and so do they want to do that for another year or they just want to take this offer and be done with it.
So I hope you guys found this information useful. Now, for more on me or more about me, you can reach me at www.realestateinvestoracademy.com and we’ll see you in another training. Bye for now.
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