What Are Some Reasons a Property is on the MLS for over 30 days?

[Stephanie Ro]

For my first purchase, I will be house hacking in a multifamily property. The examples below just happen to be in PA where I have never lived. The questions apply to any property no matter the State. When I return to the US, I am happy to go anywhere only if there is a sports bar in sight!

While browsing the MLS, I notice that properties sit on the MLS over 45 days. Instantly, I think there is something wrong with them – termite damage, major plumbing issues, structural/foundation problems…etc. I've even seen photos with contractor's equipment lying around. It looks like they walked off - not very attractive. Perhaps financial issues with the investor?

However, there are some properties that are listed as “turn-key” or “newly renovated”, yet they sit on Redfin for over 100 days. (I take the property descriptions with a grain of salt.) My thinking is that this area really isn’t a renter’s market or that the house is too rural for a big interest.

What else can it be? 

#1 For example – https://www.redfin.com/PA/Pittsburgh/7413-Duquesne-Ave-15218/home/74519930 this one looks like college aged party-goers live here, but it states that the two current tenants wish to stay. (Personally, I would renovate the whole thing (lightly) and get new tenants who would pay a few hundred more). An unfinished basement would be a dream!
*if there are two renters, why can’t this sell?* Why are there no investors interested?

#2 https://www.redfin.com/PA/Somerset/363-W-Church-St-15501/home/139058626 This one looks really fresh, but it's appears to be rural. Maybe too rural for an investor? Why do you think this has been sitting on the MLS?

I know to consult a REA to get a more clear story, but at first glance, what can you tell a new investor to be like me? If you came across these properties on the MLS, would you investigate or pass them up?

Thanks!

-Steph

[Marcus Auerbach]

Hi @Stephanie Ro - we have seen more listings lately, in the lower price points a lot of one house landlords are unloading property, but also more residential seller that had been on the sidelines last year - at least here in Milwaukee. So this is a very healthy development, we needed that. But even so, good deals will sell on the first weekend. We used to see 5-10 offers in spring, now its "only" 2 or 3. If a property sits longer than a week or two then there is something wrong with it and in the end it comes down to two things, price and condition. We see a lot more price reductions now on MLS - sellers have been over confident and pushing it too far.

In every market you have what I call seasoned buyers: they have been looking for a while maybe made an offer or two. They are local experts and have been watching every house in their price range and target neighborhood. If they pass up on a house for 30 days, you are right there is a reason. But that reason may also be an opportunity for you: if it's just price the answer is simple: make an offer! If it's poor marketing or terrible pictures, you won't know until you see it. It could be a diamond in the rough. Finally, condition can be cured with the right price, but stay away from houses with bad bones.

Next, no need to be in a "renters area"! 

When I bought my first duplex in 2008 I had the same notion and was worried if i buy a property in an area with no renters then I can't rent it. I have to chuckle when I think about that. Tenants are like tourists, they don't like to many of their own arround! Today we buy single family homes in the suburbs and rent them to families. Over 1/3 of the US population rents. So don't worry about that.

Most people shop for price, not for value. Price is what you pay, value is what you get. Read that again! Value is a lot harder to understand than price, that's easy. If you have two identical houses, one with newer roof, windows and siding and the other with original from 1920 then you are looking at a 40K difference in value. Typically they will list the house with original exterior 10k less than the one with the new. Look for properties where someone already had spent money one. Every upgrade that has been done in the last ten years is one that you don't have to pay for in the next ten years!

As an agent my advice to new investors is always to define your target tenants first, because that will define your target neighborhood and price range. Next you build your financial model, you basically run your numbers for a fantasy property. Check your numbers against the market until you have found a realistic business model. At that point you will know the size, rents, condition and price - you just dont' have an address, yet. Once you get to this point it becomes very easy to look on MLS, because you actually know what you are looking for.

To get started, at least here in Milwaukee, I would start with house hacking with a duplex. You can get into a deal with low mony down, you learn the all the basics, from the real estate transaction, to landlording, dealing with contractors. Look on YouTube for House Hacking Milwaukee. Total no brainer: it takes care of your single biggest monthly expense: housing. And frees up more money to save for the next deal. Hope this helps!