Chris, CEO of Freedom Private Money fields a lot of questions from investors. Recently, one of the questions was about properties that are already listed on MLS. Are they something the real estate investor should be looking at? Can an investor come out on top when making an offer on an MLS listing?
There are a couple good strategies that Chris recommends. When dealing with a property that is listed on MLS, it’s important to keep in mind you will need to make the deal attractive to the seller to get the pricing needed for it to be a wise real estate investment.
The buyer/investor can differentiate his offer – even if it’s a low offer – by offering a cash deal and a short closing timeline. Keep in mind, in this scenario it’s important to let the title company know that private financing will be used.
A solid earnest money offer of maybe $3000-$5000 also will sweeten the deal for the seller. But, the buyer/investor should be sure to write a 7-day inspection/option period into the offer, so that there is time to get the property inspected. Then, a firm estimate of what the rehab will cost can be figured.
Also, Chris strongly advises getting the appraisal done during the inspection/option period. Keep in mind the appraised value will have a big impact on total cash out of pocket, so it’s important to get those numbers. If, for some reason the appraisal is low and will result in too much cash out of pocket for it to be the right investment, the buyer/investor will be able to opt out and get that hefty earnest money back while within the option period.
The takeaway is, YES, keep an eye on those MLS listings. Great opportunities do come along on MLS, and with a strong strategy in place, they can be great investments!