MLS and Lending - Posted by Harold

Posted by J.C. Lacasse on March 24, 2006 at 22:52:32:

Please send copy on “making trial offers”


MLS and Lending - Posted by Harold

Posted by Harold on March 09, 2006 at 19:28:56:

Is there any way to get around the MLS Listing on Investment Properties. I know you can lower the price listed on the MLS, but what if the house on the MLS is listed for 70k and it appraises at 90k? Can you get around the MLS listing then?

Re: MLS and Lending - Posted by Charles

Posted by Charles on March 10, 2006 at 24:16:22:

Do you mean, “To go around the real estate agent and go directly to the seller?”

If you are a non-agent, you can go directly to the owner of the listed property. The listing agreement is between the seller and the agent, not you. The seller is still obligated to pay a commission even if you buy it directly from the seller."

If it is listed for $70,000 and it is worth $90,000, make your offer immediate using the agent.

If you are looking for potential good equity deals, you may want to try this technique (we are using it very successfully in Baltimore)

We search all the commercial and residential listings that have been listed for more than 120 days (Known as DOM, days on market), reading the agent’s remarks and looking for clues as to the seller’s motivation.

We than call the agent, gather more information and than write an offer to buy the property below market value.

If you do not have access to MLS, find an agent who will work with you under a fiduciary broker agreement, representing you exclusively.

That?s my opinion???.

Good luck,

Charles Parrish

Re: MLS and Lending - Posted by InvestmentKid

Posted by InvestmentKid on March 10, 2006 at 14:50:38:

can you give me some examples or figures to back up your philosophy on find properties listed over 120 days? sounds like a good idea. just want to know what the ratio of hit and misses are. thanks.

Re: MLS and Lending - Posted by Charles Parrish

Posted by Charles Parrish on March 11, 2006 at 16:15:27:

In Reply to: Re: MLS and Lending posted by Charles on March 10, 2006 at 00:16:22:

Can you give me some examples or figures to back up your philosophy on find properties listed over 120 days? Sounds like a good idea. Just want to know what the ratio of hit and misses are. Thanks.

120 DOM is a simple to understand philosophy: Beginning and seasoned investors, understand that their mission is to seek out real estate that can be controlled, purchased, lease optioned or syndicated at an equity profit.

There are hundreds of methods or formulas to locate those sellers. The 120 DOM is just one of many I have used over my 30+ years of collecting and recycling real estate for a profit.

The real estate listing that has been on the conventional agent?s MLS market for 120 days or more is a prime target for the savvy investor.

Investors understand the odds of making an equity profit are greater with the battered, abused, over-priced and market worn unsold property that has been sitting around for 120 days on the market (DOM). What must the owner be feeling, rejected?

Just like gambling, the odds are with the house. In this case the buyer is the house and the gambler is the agent and the property owner, betting against the odds that their over-priced property will sell at top or above market value.

So far, the cards are stacked against them. When the property was listed, expectations were high that buyers would be competing to buy the property and satisfy the owner and solve the agent?s problem of collecting another commission.

I have to assume that the seller still wants to sell, and is willing now after all these months ready to listen to a reasonable offer on their property. As we all know the only reason a property does not sell is because it is over priced for the condition, the area or the market.

Time has a way of softening the sellers expectations and increasing there motivation.

The investor is always thinking of a way to capture equity and cash profits. He understands the time value of money and how it can motivate a seller to listen to a reasonable offer that will solve everyone?s problem.

The investor needs to talk to the agent and to ask questions and secure intelligence about the owner, the property, and the immediate market where the unsold property sits and understand the attitude of the agent. The agent wants that property sold as much as the owner wants it sold.

After many months without an offer, the seller will doubt the validity of his asking price and consider other alternatives that may help liquidate his unsold property. He may consider a reduction in the asking price, offer seller financing, subject to the existing mortgage or even a lease with an option to purchase.

By negotiating with agents, the investor with expert negotiating skills should be able to secure some very good transactions.

Call the agent to ask why the property has not sold. Most will be honest with you. Ask the agent about the seller?s motivation, their time line, why they are selling, the condition of the property, is it vacant or occupied, does it have violations, asbestos, lead paint or deferred maintenances? Make a verbal trial offer to the agent on the telephone. This is a test run to see what response you might get. Offer 20% below asking price to see what happens. Let the agent know you are a seasoned and serious buyer of properties just like this one.

Many times the agent will tell you that the seller wouldn?t accept that amount. Ask the agent to stop making decisions for the seller and to call the owner to make the offer and obtain a counter offer. Let the agent know that you are a cash buyer and can settle quickly. Let the agent know that you will reduce that verbal offer to a written contract once he comes back with a tentative acceptance.

Your object is to find the seller’s base line price. Your next step will be to make an inspection and your final offer. This is part of the trail offer referred to as second stage negotiation.

I have used this formula many times with a fair percentage of success. Once you let the agent know that you are serious and you make that TRIAL OFFER, you are officially opening up negotiations. The very sad thing is that many agents do not understand the art of negotiations and how to close a deal. They take you low-ball offer personaly. They would rather be over-protective of their client and their over-priced listing.

As for ?Hit and Misses?, an investor needs to pull the trigger for an opportunity of a ?Hit?, if he misses (dose not make a buy), that?s OK, because he did aim (negotiate), the next shot may be a HIT!

If anyone would like a complementary article on ?Making Trial Offers?, send me a note.

Charles Parrish