Realtors have been a great source for finding deals, and over the past few years, the one I have used the most. They provide a valuable service for you as a real estate investor, and if you become someone they can trust and profit by, they will do much of the work of finding good deals for you.
They can also help you stop chasing deals and by turning things around, make the deals start chasing you. This is when things become really easy. Once you prove yourself as a closer – someone who buys properties and closes on time – once you prove that you mean business, Realtors will call you with everything they get their hands on. Giving you options, deals will come across your desk all the time with plenty to pick through.
Let Realtors Work For You
I have my buyer's agent set up and run several database searches for me so that we can extract properties from the Multiple Listing Service. I will go over these so that you can have your brokers do the same. Most, if not all, broker software services allow the agent to set up these searches for you, so that you get an automatic email whenever a new listing meets your criteria.
Here are some searches I would suggest:
Tax Value Properties Realtor Search
First, I would have them set up my favorite search, the tax value spread search. This is a search that lets you put in a tax value range and a list price range. You can then search for properties that are significantly less than tax value. But before I go any further, let me emphasize this.
You cannot use tax values as an accurate guide for the value of properties. You must use recent sales comps. Not homes on the market. Not pending homes. Not homes that sold a year ago. Sold and closed homes that sold in the last six months are your true comps and will give you a true value.
The reason I recommend the tax value search is because it is the most productive search I am using right now. It allows you to slice through a large amount of data in a short period of time and look for outliers that could be your next investments.
I like to run the following parameters in my markets. You will have to vary yours to meet what is working in your market. I usually run a tax value of $100k or higher and a listing price of $80k or lower. I then drop the price on both values down by $10k until you get to $50k.
I don't buy many properties if the tax value is less than $60k. I am sure there is someone out there making good money on those homes, but it's not me. I make my money on homes that I can purchase between $50k and $100k, 95% of the time.
Days On Markert (DOM) Properties Realtor Search
Next, I would have my Realtor set up a days-on-the market search, known as DOM. Depending on how slowly your market changes, you could have him do 180 days or more, or 360 days or more. What you are looking for is a manageable list that you can analyze and make offers on.
I do not hesitate to make 50% and 60% of asking price offers on these properties. They have been on the market for so long; most people have long forgotten about them. They will be pleased to have the activity, even if they don't like your price.
Keyword Properties Realtor Search
Another search you can have your Realtor run is a “keyword” search. In some databases, there is a category for the following key words: Foreclosures, Short Sales, Pre-Foreclosures, Bank Sales, Corporate Owned, and also some of the larger banks by name.
If your markets are anything like mine, you will probably want to add more parameters than just those key words. If you run a search just for foreclosures, you will probably end up with a list that is too large to work effectively.