Searching for properties... methods?

Question

Okay what are some good systems for searching for deals? I'm looking to buy ASAP as soon as I find the right deal. But I'm getting bogged down looking through MLS listings and zillow.

The way I do it right now, I look through my most recent MLS updated listings, if I see something that looks promising I type it into zillow and compare to comps by price per square foot. If it's not at least 20k - 30k under value I move on.

Keep in mind, my strategy is to move (along with the roomates that live and rent from me), sell my existing house, and live in the new one for 2 years then sell that one.

I know this is kind of a general, broad post, but just seeing if anyone has any input, or ideas how to get access to more access (ie. foreclosure listings or something that not everyone and their mother has access to like the MLS.

Thanks guys!

Ned Carey · Answer

There are lots of ways to find deals other than the MLS Pre-foreclosure Vacant houses code violations rent court Fire burnt out landlords delinquent taxes auctions FSBO Craigs list wholesalers Absentee owners out of state owners Probate Bankruptcy Direct mail to any of the above. Nobody is finding deals "left and right." which implies it is easy. Finding great deals is hard work. Also most great deals aren't "found" they are negotiated. Good luck - Ned

Brian P. · Answer

OK now what your planning to do makes sense, and I know several grads that did just that.

J Scott · Answer

In general, the methodology here is to buy a distressed property at a price that provides immediate equity upon purchase, just like if you were planning to flip the property. The difference being that you live in the house for 2 years, spend that time fixing it, and then sell and not have to pay taxes on any profits. Again, no different than a flip, but you occupy the home for 2 years before selling to avoid taxes. The risk is obviously that the market drops during those two years, but even if the market stays flat, the strategy works. And in the best case, you get some appreciate during the hold period. I agree with you that the strategy doesn't work if the property is not purchased at a discount, but I assume the OP plans to buy something with equity.

Brian P. · Answer

I was curious about the two year thing too. Are you planning on profits and thus the section 121 exemption? That is a good idea but first there needs to be profit. When I first entered the real estate business as an agent (had been investing for 10 years) we would advise buyers that were likely to be transfered in a couple of years to rent instead of buy, because that was the break even point in a basically normal market. So unless your market rises more so what good is it unless you buy at the right price. I can see your probably expecting rents to allow you to live free, so maybe that is the plan and breaking even would still benefit you.

Terry Portier · Answer

There we go Steve is making sense! :) here the county is spot on little low or on the money with MLS in this low ball market even bankers I am finding use it as a first look see. Yeah there data is only good as the data they draw on, a algorithm prob as stated.

Steve Babiak · Answer

It's not the Zillow IT smarts, it's the county recorder's updates to info that drags in many areas, where the county does an annual update; although Zillow only does quarterly updates in some places where the county updates much faster than that, so the Zillow data will lag the market there too. All Zillow has to do is mine some of the recent sales from realtor.com to get the more timely updates ...

Terry Portier · Answer

Interesting, you'd think the IT weenies figure out how to move data faster, when they do the power of Zillow will be unleashed. MLS you're toast! ;) Or, "It's like comparing dog sh!t(MLS) to a hot fudge sundae(Zillow)". :)

Rick H. · Answer

We figured out some time ago that the flaw in Zillow's Zestimate algorithm is its problem when the market is moving (either direction) fast. In a fairly static market, the info isn't too bad, but how often is the market stabile?

Terry Portier · Answer

James Hiddle Obviously we all know you get what you pay for in life and MLS does not come cheap. I say all the power to sites like Zillow and I hope that lots of folks visit their site so they get more sponsors, so they provide more accurate info so us REI don't have to buy MLS when some of us have no interest in selling RE for living. It is also nice seeing Flat Fee selling services emerge recently for the same purpose. :) If you pay attention to some blogs and post by good appraisers they use several data points, not just MLS.

James Hiddle · Answer

I still wouldn't trust Zillow even if it weren't off by much. I'd prefer the MLS above anything.