Quick Case Study: How I Lost A $100,000 Deal
We had a saying when I was 10 year old playing outfield in baseball. Our coach, would gather us around with a blade of grass sticking out of his mouth like a toothpick and he would say,
“Men, when you snooze, you lose”.
Of course he was referring to one of us who was picking dandelions and chasing birds in the outfield, where nobody hits the ball, until this game. In all the yelling and screaming to “get the ball” I threw the baseball as hard as I could and it happened to go over the backstop and somewhere into the trailer park close by.
Well, its been a long time since that baseball moment, which my family remembers so well. However, about a week ago I had a similar “you snooze you lose” moment with a valuable lesson attached.
It all started when I was pulling some comps on the MLS…
See, I like to teach my students to be an “expert” in their chosen area. One of most effective ways of being an expert identify a opportunity market, study the comps inside and out and then set up MLS searches that screen out the overpriced junk and bring to my attention the stuff that is decent or occasionally heart thumping forgot how to drive awesome.
Well with it being the holidays, I kinda ran my search once a week instead of everyday like I normally do…
…I mean, the searches take an exhausting 15 minutes a day and somehow I wasn’t motivated enough to do that. As fate sometimes has it, I happened to find a deal that I missed in my searches. I missed it because it went pending to quick and was a multiple offer frenzy.
Here is the worst part…
I know this listing agent quite well. He doesn’t always think to pick up the phone but if I would have called him, I could have gotten this deal locked up at list price ($42,000).
Here are some more details of this deal:
- List price:$ 42,000
- Sold Price: $80,500 (gee, I wonder if it was a good deal)
- Terms: Cash
- Days on Market: 6
- Clean REO Price: $150-$180k (conservatively)
- Retail Comps: $200-$250
- Number of times I have double dipped with this listing agent: 4
- Strategy: Buy at $40-$80k, eat a steak, re-list the day after I close for $174,900
Click on this to see how I realized my laziness cost me –> Bob’s $100k goof video
Thanks,
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Wow, I need to get access to the MLS like you have been talking about. Thanks for the video, cant wait to see the same thing with you as the cash buyer making 100k!
Lear | Jan 23, 2009 | Reply
Lear – Yes, having access and knowing how to search the MLS is the key to operating a very low involvement, highly profitable flipping business. Some of my peers like to call me the “make $30k while you sit on your butt” investor.
I can live with that
Thanks for the comment.
bobnorton | Jan 24, 2009 | Reply
Hey there, I sent you a message via the “contact” at the top and I just wanted to verify you got it. Maybe it’s not working correctly or something. How is that unfinished property going that you did a video walk through on and talked to Jp about? Did the bank accept the 200k offer? Did the builder buy it from you for 225k like you were hoping? Thanks!
Lear Kruse
Lear Kruse | Jan 26, 2009 | Reply
Lear -
I’ve been busy snowboarding for a few days
The bank will not budge on that property. They are stuck at $250k. Their are 2 other builders who are looking at it and both are very close to paying $250k for it, which I think is really crazy. I am very surprised that the bank is not negotiating more but I figure maybe its the FDIC and since they don’t have pressure to keep certain reserves at the bank, they are not in as much hurry to sell.
Thanks -
bobnorton | Jan 27, 2009 | Reply
hey bob,
Your investing model is awesome! I appreciate you sharing everything with us. When you make offers, are you just throwing out lowball offers or just searching for that house that is listed at a huge discount so you can make a full listing price offer? how do you market that property when the realtors sign is still in the yard? do homeowners question why the sign is in the yard? thanks for the help!
tim myers | Feb 6, 2009 | Reply
Tim – I prefer searching for homes that are highly discounted and making full price offers. Of course, in making a full price offer, it has to be priced right! But it does happen. I call it cherry picking!
I also write lowball offers but usually only after the property has been on the market for awhile, an offer fell through or it can’t get a mortgage.
When it comes to marketing my deals after they are under contract, if I am concerning about the realtor sign in yard, I throw the sign in my truck. If I am reselling to homeowner, I typically close on the deal and do some type of minor rehab and then relist with my realtor.
Hope this helps,
Bob Norton
bobnorton | Feb 8, 2009 | Reply
hey bob,
when you set up your searches, how do you do that? what is your criteria? what are the key red flags that your looking for? thanks for the help bob!
tim myers | Feb 9, 2009 | Reply
@bobnorton –
hey, Bob
on your video, the access you have to that MLS website, what website is that? and how much fee do you paid to get the access?
Tony | Apr 15, 2009 | Reply
Tony – The MLS access I have is because I am a realtor in Michigan. The MLS “system” is called Realcomponline. It costs $33 a month. I do teach how to get access though if you aren’t licensed. Here are some steps that I suggest:
1. Go into a real estate office that is near your ideal place where you would like to invest and ask for somebody who is on the “floor”
2. Communicate that you are looking to invest in the area but want to do your homework first before you drag them all over the place.
3. Ask them if they would be willing to sit down with you for 10 minutes and show you how to start navigating the MLS “101 style”
4. Have them print them off a list of properties for you to go look at and then you go by yourself to check them out.
5. Report back to them quickly.
Eventually you will have enough rapport that they will be willing to let you use their MLS, even if its while they are sitting right there reading the newspaper. This is just one of dozens of ways to get MLS access.
Hope it helps!
Bob
bobnorton | Apr 17, 2009 | Reply