Is The MLS Underrated??

Question

What up BP community?!

As rates continue to hold strong, houses on the MLS are sitting for longer. The longer they sit, they more motivated the seller. With rates where they are, it has taken out a lot of primary residence buyers and even some investors as well. With the future of the economy looking uncertain to a lot of people, is now the time that investors start browsing the MLS a little more seriously than in years prior and taking advantage of less competition?

Personally, my last 3 purchases are off the MLS and I want to hear others thoughts. I had wholesalers bring me some deals recently but after assignment fees, closing costs, etc. (This may sound crazy to the anti MLS-ers) the deals that I was able to find on the MLS were better buys than the off-market properties.

So, this leads me to my question......

Is the MLS underrated for finding solid cash flowing properties?

Rick Albert · Answer

Granted I'm biased because I'm a Realtor but I love the MLS for deals. What I like about it is searching for aged listings. That tells me that the market has truly spoken and it is either overpriced or the agent is doing such a horrible job marketing it that I can still get a deal on it. Often when a property is overpriced, you could get it for less than what it could have sold if priced correctly from the get go.When buying off market, sometimes you pay a premium to avoid the competition. As an investor, either the numbers work or they don't work and you just move on.

Trevor Richardson · Answer

I feel on-market properties always are underrated. There is some allure to off-market deals. A buyer/investor typically seems to think because a property is off-market it’s a great deal, or they are not overpaying. That’s not really reality, on market sellers want to sell, some “need” to sell. The numbers are what we focus on. Some of the best transactions we have done for clients were great deals hiding in plain sight on the open market.

Marty Boardman · Answer

I fix and flip houses (AZ and WI). My issue with MLS properties is that they get A LOT of exposure to a very broad market. After the initial wave of interest from retail buyers, landlords and rehabbers subsides and DOM begins to increase it's like the house becomes stigmatized or tainted. So as a rehabber the only way I can "cleanse" it and make a profit is to: 1) get a huge discount and 2) do a major renovation so the house looks nothing like it did when I bought it off the MLS. Of course, if your exit strategy is to buy and hold then this "theory" of mine isn't applicable. If you can hit your target ROI then I think the MLS is definitely underrated. For what it's worth, I'm a licensed Realtor in AZ (and was in WI from 2013-2022). I agree with @Nathan Harden that the MLS gives you an edge over the competition with knowledge of the property.

Nicholas L. · Answer

@Nathan HardenI think an MLS listing with price drops could be a deal. But I find that properties that sit and don't drop price... means the owner is holding out for what they want and doesn't care if it doesn't sell =)

Emma Duncan · Answer

I purchased two houses off of the mls last year. Worked out awesome! One was a “back on the market” deal that the seller was very motivated to get rid of after losing several weeks of listing time before the previous offer fell through. I got a good discount on that one. The other was a motivated seller as well. The place was a previous rental property, tenants moved out and he was leaving it vacant to show and sell so motivated to get it done quickly. It only took $5k of updates to turn and get that one rented for me too. Both are solid cash flowing deals. I am definitely keeping an eye on the mls and targeting properties over 30 days and with multiple price drops. I think now is the time to snag some good deals there.

Nathan Harden · Answer

I am in the exact same boat as you, I 100% agree. I'm an agent myself and I have brought properties to clients that are on the MLS and they won't even give it the time of day because it came from the MLS.In some ways I like the MLS better because when going through a wholesaler, they have such little knowledge of the property as appose to the MLS, the Realtor will 99% of the time have more info than a wholesaler would anyways.

Paul De Luca · Answer

@Nathan Harden I agree that the MLS is generally underrated for deals because every agent (and client) has access to it. People take it for granted and usually assume that the "unseen deals" (off market properties) are better opportunities. I totally agree with the above responses.Buyers want a perceived "edge" over other buyers with access to more opportunities. Which does help, don't get me wrong.

Eliott Elias · Answer

It's as powerful as you make it. If you are calling MLS listings all day and looking for deals you will find them.

Andrew Syrios · Answer

We find properties on the MLS every once in a while. It used to be quite common when there were lots of REOS between 2009 and 2013 or so. But today it's quite hard. That being said, it's getting easier, but the market is also soft so a great deal in 2023 needs to have a steeper discount than it did in 2021.