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The Pros & Cons of Flipping Houses on the MLS

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on Thursday, 10 December 2015
BestTransactionFunding

An increasing number of real estate investors appear to by flipping houses on the MLS. What are the pros and pitfalls of this strategy? How can it be mastered?

While some inexperienced investors and onlookers will argue that it can’t be done, a five minute review of properties on Realtor.com clearly shows investors acquiring and flipping houses on the MLS with big markups. But is it as easy as it looks?

The Advantages of Flipping Houses on the MLS

Some may snub their noses at the thought of sourcing or selling real estate deals via the MLS, but others appear to be making $50,000 a pop in just days doing it. Sourcing properties from the MLS significantly simplifies the search process. It’s a constant feed of potential deals. These are active sellers too, which makes the process of negotiating and securing a contract much easier than having the extra step of trying to convince and owner to sell too. The MLS offers significant volume, with many properties near and far to pick from. On the flip side it puts a whole army of agents to work on selling your deals for you. As for the costs of working with real estate agents; once investors do the complete math the numbers may not ultimately be that different from direct mail, cold calling, and other marketing methods.

The Pitfalls of Flipping Houses on the MLS

The biggest issue of selling flips on the MLS is often that potential buyers can see recent transaction and listing history. They can see if you just bought this property for $50,000 less yesterday. They may not know how hard you worked to negotiate, any improvements you are making, or other ways you’ve added value. Regardless of whether you are offering a fair deal or not, some will snub your deals out of principle. Unless you negotiate commission rates with Realtors or use a flat fee MLS service then cost may be an issue. This can also create valuation and financing issues for end buyers. Their lenders are going to do their homework too.

Solutions

Flipping houses on the MLS works, but it has quirks too. Know when to use it, and how to master it.

One way to maximize the upside is to just use the MLS for one side of your flips. At a minimum it can be a great tool to supplement other channels. Just make sure visible data is edited rapidly, and when needed connect buyers with alternate funding sources or use hard money when you can’t use transactional funding.

 

Authored by BestTransactionFunding.com; the leading source of transactional funding and hard money loans for real estate wholesalers, where 100% financing, and saying “Yes” is what we love doing all day long.

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