Today’s REI Classroom Lesson
In the classroom today, Tony Javier goes over 3 principles to think about when handling deals from MLS.
REI Classroom Summary
Learn more about getting deals on MLS and what to do after you put an offer in that was rejected.
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.
Tony: Hi, this is Tony Javier with RealEstateProdigy.com. Bringing you your next REI classroom, and what we’re going to talk about is MLS goldmines.
Mike: This REI classroom real estate lesson is sponsored by UglyOpportunities.com.
Tony: So I call it MLS goldmine because it is a goldmine. A lot of people when you talk to them about the MLS and getting into the MLS, they say, “Well, it’s way too competitive.” For those that don’t know what the MLS is, the MLS is the Multiple Listing Service, and it’s the program realtors use to put their properties in the MLS when they list properties for sale, and real estate agents can go in there and search for their clients to find properties that are available to buy.
So I can tell you right now that we contribute hundreds of thousands of dollars each year to the MLS. We probably find close to half of our deals in the MLS, and it’s something that if you can get your system down of searching for properties in the MLS to buy, that it will change your business and it’s basically a free way to find properties.
So there’s three principles that I can tell you that you need to follow when you’re diving into the MLS, and first of all, agents are the only ones that have access to the MLS, realtors. So, in order to start doing this, you need to either get your own real estate license, or partner up with a realtor that has it, and let them know that they’re going to earn real estate commissions on what you buy, and they’re also going to earn commissions on those properties that they find for you that they’re going to sell for you once you’re done flipping them.
The three principles that I can tell you right now that we use to be very successful in the MLS are one is, we need to make a lot of offers. I mean, bar none, it’s very competitive. When a property comes on the market and it’s a good deal, you’ve got maybe 10 people bidding on it and in bigger markets and competitive markets may have 30, 40, 50 people bidding on that same property. So it’s really a numbers game. You have to throw as many offers as you possibly can at these MLS properties to be able to get one. I would say that it’s probably between 20 and 40 offers that we make in the MLS before we get one deal.
But I can tell you one thing, that one deal can make you $20,000, and one of the best deals we’ve done off the MLS is $75,000, and that was only on a $220,000 property. So I can tell you right now there’s deals that I can show you a list of properties we’d made between $20,000 and $50,000 on properties that are in the MLS when there’s a lot of other people are saying don’t buy into the MLS, it’s not worth it. So, make lots of offers.
The second thing is, is that you’ve got to track your offers. So you’ve got to make sure that you put them in a spreadsheet, you’ve got to make sure that you’re tracking them to see what you’ve offered compared to if you don’t get it, what it sold for, so that you can start adjusting your offers, trying to figure out the trends of what could I have done differently, so that when you keep making offers, you can adjust and cater and tweak to hopefully get some deals.
The other thing is that you’ve got to be able to see what you’ve offered on those properties and be able to talk with the agent and know what you’re talking about, because if they call you and say, “Hey, I got your offer on 123 Main Street,” and you have no idea where that offer is and what it is, you’re going to look stupid and the agent’s going to probably move on to the next person. So make sure you track your offers, you’ve got the data, and you can use that data to your advantage.
So the third thing is follow up, follow up, follow up. So if you’re doing any kind of seller marketing right now and you’re getting leads coming in, one of the things that you need to really do is make sure you follow those leads, even if you don’t get those leads the first time you make an offer because you never know, a month down the road, two months down the road, three months down the road, if that seller is still wanting to sell and they’re still trying to find other avenues, you may call them three months later and they say, “You know what, I will take your deal, I’m sick of dealing with this.”
It’s the same thing with MLS offers, you’ve got to make sure that when you make offers first of all you follow up and make sure the agent got it in the first place. Then if your offer is not accepted and you know that it’s still on the market follow up a week later, follow up a month later, follow up, you see it’s on the MLS still, you have to follow up three months later and say, “Hey, by the way, I’ve submitted a $75,000 offer. I see you’ve lowered it down to $85 thousand, can you resubmit my offer and see if they’re willing to take it?” We’ve got numerous properties by this simple principle of following up just to make sure that even though you don’t get the property right now, it’s something you may get three months down the road.
So you’re probably asking yourself what kind of properties are on the MLS. We search for a lot of different properties. Number one is foreclosures. Every agent that has foreclosure properties is going to put their foreclosure properties in the MLS.
You’ve got short sales you can search for, you’ve got fixer-uppers, you’ve got properties that have mold, you’ve got properties that are estates. So when you’re talking to your agent and you’re telling them what properties to search for, they need to look for keywords. Keywords are probates, estates, fixer-upper, mold, foundation repair, keywords that can trigger that this is a property that needs a lot of work and that you can create value in.
There’s also, if the agent’s savvy, they’re going to know that there’s different things in the MLS that they can search on. They can search on, they can click foreclosures, they can click, some MLS have probates and estates, some have other categories that they can just click a few buttons and narrow the search down to where they’re not having to do such a broad search.
So MLS, I’m telling you right now, create a system for it, create a spreadsheet, make a lot of offers, track those offers, follow up on them, and I guarantee you that if you follow those principles and you make offers in the MLS that you will get good deals. That’ll keep you from having to send out a bunch of mailings, that will keep you from having to meet with as many sellers, and if you still want to do those things, we still do those too.
We get tons of properties off of direct mailings and other things we spend money on. But why spend extra money on some marketing, especially if you’re new in the business and want to find deals very inexpensively, why not just dive into the MLS where there’s just hundreds of thousands of dollars if not millions of dollars sitting there waiting to be had.
So I hope you enjoyed this REI classroom, and we’ll see you on the next one.
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