Where did all the deals go?

I have been getting investors swarming me lately telling me they can’t find any deals anymore. There are no deals on the MLS and when there is they are getting bid up. I’ve heard from MLS investors that they made an offer on a house and there were 25 other offers on the property and the property went under contract $20,000 higher than list price. How crazy is that.

I have an answer as to why real estate deals are difficult to find!  Banks started to rent out their houses after they foreclosed on them!  If you pay close attention to the foreclosure list in your county, you may see up to 150 houses or more per week that are foreclosed on, but when you check the MLS, you see only ten or fewer houses actually posted for sale as an REO.  Last year, REO realtors had between thirty to forty listings and closing per month, however today, REO agents may only have two to five properties listed and closed per month.  Banks are offering homeowners in default the option to do a Deed in Lieu (DIL) and then offering them the option to rent the property back.  However, there is a qualification process involved.  If the homeowner is not offered the option, or they do not qualify, banks rent the properties out to someone else after foreclosure.  This is a one way banks are recovering some of the money they lost.  Renting out properties after foreclosure not only helps banks recover some of their losses, it is also a means of revenue to allow them to maintain property insurance, pay property taxes and earn a profit until the market recovers enough for them sell the property for the amount of the original deficiency.  Banks are getting smart and creative!

So, how do we get around this dilemma?  The answer is to become more creative in finding your deals!  Marketing to distressed sellers to entice them to sell their homes as a short sale before they are foreclosed on is one method and has been my method for the past five years.  The MLS is NOT a strategy to buy houses anymore!  This current housing market is taking a shift and is turning into a seller’s market.  The realtors in my office are finding fewer properties for our buyers.  More and more, owner occupied buyers have to offer more than list price to buy a house.  I am seeing this in several markets across the US.

Therefore, it is time to get back to the basics and start marketing, driving-for-dollar, or knocking on doors!!!  The deals are out there, but you have to create them.  Motivated sellers still exist in every market!