Wholesaling MLS Properties: Does It Work?
Can wholesaling MLS properties actually work and be profitable or is it a futile, ridiculous waste of time and energy?
Many real estate investors may laugh at the idea of wholesaling MLS properties and dismiss it, while burning immense resources on hunting down other types of discounted deals or enduring the frustration of bidding wars over REOs. However, it always pays to do your own homework and make up your own mind when it comes to real estate investing strategy…
2 Reasons Flipping Houses via the MLS Makes Sense
1. Easy Source of Inventory
Being so underestimated by other investors makes the MLS a great choice for finding deals. Plus, it simply couldn’t get easier; you don’t even have to search anymore. Set your criteria up and have the latest listings automatically sent to your new iPhone 5 or mini iPad no matter where you are, from the beach to cruising the Mediterranean or skiing in the Alps. You don’t even have to spend any time or money marketing for them while others burn themselves out with all sorts of complex advertising campaigns.
2. Real Estate Agents Can Make Great Employees
Looking to the local realtors’ Multiple Listing Service is a great way to meet agents and develop relationships so that in the future investors may even get the first shot at deals before they go public. However, what many overlook with all the hype about outsourcing today is that, in many ways, a real estate agent can essentially become a low cost assistant. Instead of having to hire a small army of remote staff and train them, a good realtor can provide many of those same functions for free from marketing to evaluating deals and acting as a personal receptionist and property manager, and often virtually for free.
How to Make Wholesaling MLS Properties Work for You
It is true that many of the properties for sale in the MLS are overpriced or the spreads may be too thin to make sense, but there are also golden nuggets if investors know how to look for them and create larger spreads.
Without a doubt the biggest complaint about homes listed on the MLS is the realtor fees which pad out prices and eat up profits, but this is exactly where savvy investors can get the edge and even potentially flip these same homes to others who snubbed them because they were originally on the MLS.
If you can get access to the back end system and realtor view of home listings, you can get a better picture of how motivated a seller is from how much commission they are offering and what bonuses or concessions are being offered. Investors can use this as leverage and negotiation room.
Those who have real estate licenses can immediately use these real estate commissions to build in at least 3-6% profit, plus bonuses.
However, it is also very easy to negotiate a realtor’s commission down, especially in exchange for a higher volume of deals or for picking up some of the work and simply having them act as a conduit to submit offers. Imagine a $1 million home for sale offering 10% commission. If the agent takes just 1% that still automatically leaves $90,000 on the table as potential profit from just one deal.
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