The MLS is a suite of services and software that enables real estate brokers and agents representing sellers under a listing contract to widely share information about properties for sale. Almost every successful investor buys deals right out of the MLS and has made it part of his or her marketing and acquisition process.
As great as the MLS is, however, there’s a catch. The majority of the properties listed on the multiple listing service are owned by sellers who are not motivated to sell their property at a discount to an investor.
Don’t let that discourage you. There are plenty of deals on the MLS. The key to finding them is to have a SYSTEM for sifting and sorting through MLS postings in place. If you learn and implement what I am about to teach you, you will set yourself up for a stream of continuous deals. This is call The MLS offer system.
The MLS Offer System
The MLS offer system is a process we use every day to farm through new and existing listings in our area to find bargain properties that we can then sell to bargain hunters. Within the MLS offer system, you will be researching newly listed properties to try to find pre-foreclosures properties, REO properties that are owned by banks, and distressed properties that need work. I have divided this system into seven steps to make it easy to understand and follow:
- Filter and Find Potentially Distressed Properties
First, you need to learn how to properly run effective searches within the MLS. Have your real estate agent set the search criteria up for you. Next, research all newly listed MLS properties every day. Speed is an advantage. The MLS can be highly competitive, so you definitely want to be the first one to know about a good deal when it hits the market. Finally, look thru the pictures for properties that show signs of distress. Keep a records of all the properties and agents that you reach out to. A lot of your success will be determined by how good of follow-up system you have.
- Reach out to the listing agent or get your own Buyer’ agent
Contact the listing agent to gather more information; you want to know how much activity the property has had and whether the seller is open to offers from investors. If the agent focused on finding retail buyers, then the property will become a lower priority. If the agent is open to working with investors, then you will want to investigate the property further.
- Run Comparables
Once you have spoken with the agent and it sounds like she believes the seller would be interested in working with an investor, then you should run comparables on the property to assess its market value. Ideally, they are relatively similar to the subject property, open market transactions, and with a time of sale close to the date of value.
- Walk through the Property
Run your comparables you should go visit the property to examine its condition and to make an estimate of the repairs the property needs.
- Drive by the Comparables to Determine the After-Repair Value
After you walk through the subject property, drive the comparable sales in the area in order to determine the after-repair value or how much the property would sell for once it’s fixed up.
- Make an Offer
Now you should be ready to make an offer. If you have discussed with an real estate agent to represent you, you will have this agent write the offer up. If the offer is accepted, then you will start the closing process. If the offer countered, then you may want to negotiate. If the seller just isn’t motivated enough, then you will want to follow up and resubmit an offer 30, 60, 90 days later, if the property is still on the market.
- Follow up
In about 30 percent of deals we get using this MLS offer system the seller was originally not interested. However, over time some sellers become more motivated if they can’t get higher offer or if they have a buyer that falls out of contract. It is critical to have a really good follow-up system so you can aggressively follow up on properties you have made offers on. Use your database to set up a strong follow-up system.
When you start out you will be the one who is doing all the work. However, after you wholesale a few deals I suggest hiring an assistant or virtual assistant you can train to help you work this system. If you develop a system and work ON your business, rather than IN your business, you will quickly replace yourself in each role.
Using the MLS effectively means having solid systems in place. My system took years to create, refine and test. Remember, the MLS isn’t the only source available to you when it comes to scouring the Internet for wholesale deals.
Speaker, Motivator, real estate Investor
Empowering Strategic Investment
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