One of the most frequently asked questions that we get from real estate investors is, "Can you find wholesale deals on the MLS?"
The answer is YES.
There are definitely great on-market deals for real estate investors who know how to find them.
The Multiple Listing Service (MLS) has always been a great place to find deals. In fact, the MLS is listed as one of the top 3 seller lead generation methods by investors who do 50 or more deals per year. (Find out the other 2 here...)
There are a couple different ways to narrow down MLS listings to find the good deals, and then a few tricks to wholesaling them.
First, let's talk about how to find great deals on the MLS.
Finding Great Deals
To get started finding great deals on the MLS, you have to first, get access. There are three ways you can access MLS listings.
- Work with/hire a real estate agent for your team
- Become a real estate agent
- Access it through a third party tool like FlipComp.
While all of those three options have their pros and cons, I will be focusing on the third option in this article. I believe that being able to access it without a third party enables you to move quicker as a real estate investor.
Our FlipComp software enables you to access MLS listing data to mine it for great deals and utilize it for comping and analyzing deals. If you want to check it out I've included a link at the bottom of this article for you to get a free trial so you can get started finding deals for free.
Property Description Keywords
The first, and most important, way to find great deals on the MLS is to search by the keywords that real estate agents use in property descriptions to clue you in to the seller's motivation.
These words could include:
- make offer
- motivated seller
- fixer upper
- needs updating
Over the past 12 years I've identified over 50 keywords that real estate agents use that can indicate whether or not a property might be a good investing deal.
Once you've identified those keywords, you should set up alerts that notify you when a new property hits the market that includes those keywords in the description. It's super important that you find out about new properties as they hit the market. We'll discuss why later in the article.
Finding Properties That Have Been On The Market A Long Time
The next best indicator of a motivated seller is the number of days on the market. Properties that have been on the market longer than 90-days, in our current hot housing market, are primed to accept an offer.
With the right incentives, like waiving the inspection period, offering to buy the property as-is, or paying part of the closing costs, these sellers are more likely to accept a lower offer.
Look For Back On Market Listings
Another ninja tip is to pay attention to listings that come back on the market after they went contingent or pending.
There are a lot of reasons why a home would be back on the market. Everything from the buyer not being able to get funding, to something on the inspection scaring the buyer away.
Either way, sellers become more motivated after getting their hopes up that their home is going to sell and then having it fall through.
You can sign up for a number of different services to be notified when a great potential investment property comes back on the market. Sign up for sites like Zillow, or Redfin and every property you like or favorite on those sites will notify you if they come back on the market. Your real estate agent can also do this.
Now that you know how to find the deals, let's talk about making offers.
The offer process for on-market properties is very similar to the offer process for off-market properties.
The biggest difference is that you will be making your offer through the real estate listing agent instead of sending it directly to the seller. Real estate agents are required to show their clients any written offer that is made on a property, which is always good news for you, the investor.
Although they may have to show them all to their client, it doesn't mean they are going to like it.
I recommend shooting the listing real estate agent an email ahead of making an offer to show them that you respect their time and give them the range you are going to come in at. Then ask them if it's something their client might be interested in. You could say something like...
Hi Sally Realtor,
I noticed you're the listing agent on 123 Main Street. I am a local real estate redeveloper and am interested in making an offer on the property. I don't want to waste your time or your client's, so I thought I'd shoot you an email before submitting a formal offer.
Would your client consider something in the $120,000-$130,000 range?
If so, I can submit an offer today.
I appreciate your time.
P.S. If this client isn't interested, do you know of any other properties that I might want to look at?
That's a great way to open a line of communication, but not waste anyone's time.
You'll also notice one powerful phrase in that email...
"Do you know of any other properties that I might want to look at?"
If a real estate agent is willing to list a property that is below market value, they might have others that would make great investment properties, so you should always be asking.
Volume of Offers
To be successful in real estate investing, whether you are wholesaling, rehabbing, and/or buying and holding properties, you have to make a LOT of offers.
I'm not saying you should put out a million low ball offers without any due diligence on the properties. I'm not a big fan of gurus that teach you to create an offer bot or have a VA in some other country fire off a million offer contracts on properties.
That's a good way to create a bad reputation in your market and/or catch the eye of your local real estate regulatory agency.
I am saying that you need to identify properties quickly, analyze them effectively, and put offers on them without hesitation, if they fit your sweet spot. Oftentimes you are going to put out 25... 50... even 100 offers before you get one accepted, especially if you are new.
But don't get discouraged; keep making offers.
Act Fast On New Listings
The other important aspect when it comes to making offers on MLS properties is to make offers quickly. The more offers a seller sees, the more competition you have and the less likely you are to get your offer accepted.
The key to acting quickly is being notified as soon as a property hits the MLS. That's where FlipComp comes in. FlipComp allows you to set up notifications to immediately have an email sent to you the moment a new property hits the MLS that matches your criteria.
Wholesaling a Property on The MLS
Now that you've made an offer on a property and have gotten it accepted, it's time to wholesale it.
There are two different ways to wholesale an on-market property; double close or assign the contract.
Double close is when you get a property under contract, fund the deal, close the deal, and take title to the property.
Then you add your wholesaler fee onto the price, find a new buyer, and sell the property to them. This is the easiest (and most ideal) way to wholesale a property that is on the MLS. You can also create a larger wholesaler fee when double closing if the original purchase price is low enough due to the other buyer not having any idea what you paid for the property.
Assignment of Agreement for Purchase and Sales Agreement
The other way to wholesale an MLS property is to assign the contract.
This is when you submit an offer on a property, get it under contract at an agreed upon price, add your wholesaler fee onto that price, and then find another buyer to assign the contract to.
The new buyer then funds the deal and brings the money to closing, the title company pays you the difference, and then pays the seller your agreed upon price.
Contrary to a lot of investors' opinions, this IS possible when working with a real estate agent as long as their Purchase and Sales Agreement doesn't prohibit assignments.
You should also know that you will not be allowed to assign REO properties and Short Sale deals. Oftentimes, banks prohibit assignments of these properties from the start.
You should find a good investor-friendly title company to work with to close on the property. One that is familiar with this type of transaction and can work with you and the listing agent to complete the transaction quickly and efficiently.
Still Not Convinced It's The Right Lead Generation Strategy For You?
The truth is, regardless of whether or not you see the MLS as a viable tool for finding wholesale deals, you still need to find accurate comps, and you don't want to miss out on potential rehab properties. Those are two areas where the MLS is king.