Should I stay away from properties that have been on the MLS for a long time?

Question

I am interested in an area in southern Illinois, it has a few multi family properties that come with tenants, but they have been listed for a while. I’ve seen the listings from 200-1150 days. Is this a red flag I should stay away from?

Dominic Mazzarella · Answer

It certainly could be a red flag, but not necessarily. I bought a property that was on the market for 7 months and was nervous other investors saw something I didn’t. All the numbers checked out and I went through with the purchase.

When I made some changes to the property and put it back on the market about 15 months later for double what I paid, it was under contract in 48 hours.

There are a number of factors for why a property could be on the market a while. The seller could just have an unmotivated broker that doesn’t market the property well, among other reasons.

Dan Mcguire · Answer

As an investor and realtor I took the opposite approach. I searched for properties that stay on the market for a long time. I found a house that needed work, but was also over priced by a tad for the condition. The home needed a lot of work including roofing, windows, siding , kitchen, baths, and mechanicals. The bones were solid, but it was a project. The yard was over grown with trees or weed saplings that grew into trees. The home happened to be owned by an estate and they were motivated to sell. We picked up the home for a large discount as the estate wanted to close the deal. We invested into the property and came well ahead of the local market. This home is one of my favorite rental properties and does very well for us. As previously stated, do your due diligence work and keep an open mind.

JD Martin · Answer

No way to know without doing your own due diligence. I once bought a house that had been on the MLS for over a year. I got a reasonable discount on the purchase price, and it has made me a good amount of money over the years. It smelled of cat piss. Bad, real bad, respirator bad. All of the smell was in the wood floors, original from 1928. I spent a few grand sanding and refinishing. That's all it was.

Kim Nelson · Answer

Here's my take on it.

You just need to do your due diligence and dig into the real reason. Sometimes it may just be that the seller thinks its worth more than it is and refuses to come down on the price. In my experience, it is worth simply reaching out to your realtor first. I have seen some properties on MLS that I contact my realtor and they may know right away the reason it isn't selling from showing it previously, or they can review the realtor comments that aren't viewable by the public on MLS.

Other potential reasons I have seen properties listed on MLS for a long time.

1) Some investors may not be comfortable inheriting existing tenants.

2) It may be it is a class C neighborhood.

3) Structural issues. (Foundation, etc)

4) Black mold, asbestos, lead paint, other other costly repairs.

5) It need significant cosmetic repairs where the purchase price just isn't worth it.

6) They may have an odd layout of the rooms.

7) Non-compliant septic.

8) Trouble with permits or tenants

9) Listing agent has a poor or incorrect listing. (For example, they have the square footage, lot size, or # of rooms incorrect.)

10) The value of the property just simply isn't worth what you would have to pay for it. (Maybe the seller has a great interest rate, but you would have to pay twice that amount which wouldn't be profitable.)

11) Crime in the neighborhood.

12) High turnover in tenants (raising your expenses.)

Just make sure and do you due diligence before hand.

We have been able to get some great deals simply by doing extra research that the average person wasn't willing to do. A recent purchase was a lake house that wasn't selling. When looking into it, the basement had water damage that didn't worry us since we knew how to remodel that area ourselves. However, another factor was that the septic tank was shared with the neighbor and there were no written agreements in place as to who was responsible for expenses. We wrote into our purchase agreement that a separate septic agreement needed to be drawn up and attached to the recorded deed for all future owners which protected us and the other home owner,  and will make it easier to sell in the future with that in place.

Good luck!

George Skidis · Answer

Depends on the actual location in Southern Illinois. The city of Cairo and Alexander County as a whole are in a very depressed economic situation. It was so bad that in 2018 or so all properties owned by Section 8 were shut down. It seems that to be on Section 8 you need to look for a job on a regular basis. There were no jobs to be had and everyone was forced to relocate. Marion, Illinois is located in Williamson County. It is a better place to invest because of the college and local industry. Real Estate agent Alysa Bunting is a great contact in that area. Tell her George at Illinois REIA recommended her.

That being said perform your due diligence. Ask the listing agent for a list of known issues. They don't have to search them out and they will not volunteer them but if you ask, they must tell the truth.

Jules Aton · Answer

For single family residential I think it is a red flag, usually price if they are sitting. Multi-family properties often take longer to sell in my experience.

Valerie Anthonyova · Answer

Definitely, either the house price is far beyond its current market value, or there are some property disputes.

Should I stay away from properties that have been on the MLS for a long time?

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