It’s important we understand the fine line between focusing on one niche without putting all your eggs in one basket, (so to speak). Here is another investing strategy that can be added to your “ways to make money in real estate” arsenal. Expired Listings is a great real estate investment strategy with it's advantages and disadvantages. Let's explore it…
Description of niche: Contacting real estate agents with listings that are about to expire and make a discounted offer to purchase.
Why is this a good niche to Consider?
- Working with motivated Realtor to influence a motivated buyer
- Buying below market value – wholesale
What are the downsides of this niche?
- Need to find a realtor that is willing to either offer you their letterhead to email your offers OR willing to take time to regularly email your discounted offers. (Paying a realtors assistant per letter is an option)
- Need to find realtor who is willing to send you properties to review that meet your criteria in order for you to make your offer.
- You are low-balling an offer with property sight-unseen. Your offer may not be taken seriously.
Good Market Conditions:
- A lot of houses on the market
- Average time on the market for houses is 4 months or longer
- Depreciating Market
Bad Market Conditions:
- Low inventory of Houses
- Average time on the market for houses is 3 months or less
- Appreciating Market
STEPS TO DO THIS NICHE
- Find out the length of time Realtors have exclusive contract to list properties in your area.
- Interview Realtor to find one that is willing to work with you to make offers on expired listings. Ask them their ideas- – -then share yours.
- Determine your criteria for types of properties you would like to make offers to:
- Residential or commercial
- What size?
- What zip codes?
- How old?
- Price range?
- Etc., Etc.
- Ask Realtor to email you a spreadsheet of any listings that are going to expire in 1 month or less
- Ask her to email this spreadsheet to you every week
- Make offers 65% of asking price- – -ask realtor to view your offers and make sure offers are not too high. As you get to know area you are investing in, this will get easier.
- Following the system you and realtor have set up to e-mail offer to the realtor who has the pending expired listing.
- If offer is accepted- – -do full property evaluation. Go out. Get inspection reports. Evaluate Repairs.
- If offer is a good deal, sign contract. If not, provide addendum based on your inspection findings with new offer.
- Close on purchase
- Sell or Rent it
Where to Obtain Leads:
- From Real Estate Agent or Agent Assistant
This concludes my article on Investing in Expiring MLS Properties.