There are winds of change coming and they can either make you money or cost you money.

The market is returning to a more normal market and that is going to have HUGE consequences to how you find the majority of your discounted real estate transactions.

Properties are moving faster and banks are becoming less flexible when it comes to working with investors when they have properties listed on the MLS. I know what you are thinking, you didn’t think they were that flexible to begin with… yeah, correct so imagine what they are like now.

The dreaded “shadow inventory” that we all feared never materialized. Turns out there weren’t tons and tons of un-foreclosed on properties out there lurking in the shadows waiting to be dumped on to the MLS driving property prices down with the new flood of inventory.

The exact opposite has happened. Inventories have steadily declined. The number of homes entering foreclosure has been dropping as well.

This has banks thinking they won’t need us investors to soak up their distressed REOs. And they are positioning themselves to sell more and more houses directly to owner occupant buyers. So they are less inclined to take low ball offers. They are more willing to wait a little and see if Johnny and Sally Homemaker want their recently taken back homes.

Translation: the MLS will be less of an attractive source for getting homes. You should start doing the “old fashioned” thing of marketing directly to motivated sellers and troubled homeowners. Time to sharpen your skills of dealing with these people instead of institutions and banks.

Understand what I am saying, finding deals with a realtor on the MLS is not dead… and it likely was never really a panacea to begin with. But there is a shift in works. One thing to be aware of is Banks are already starting to pre-rehab properties. They are putting some money into them, getting them ready for Johnny and Sally Homemaker. Meaning the number they need to “break even” is even higher than it was before. The worst part: the rehabs they are doing are crappie at best, and most of the work will likely need to be ripped out by you and done right.

Banks pre-rehabbing these properties is something they have tried in the past and it may or maynot last long. But be aware of what is going on, plan accordingly and serve the market. DON’T try to fight the trend, work with it and adjust your tactics so you can have a high level of success in any market.

Application steps:
Work with a good realtor if you are going to make MLS offers.
Work with a good wholesaler or a few, to have access to “off line” opportunities.
Do or ramp up your own marketing to create your own opportunities.

I hope you found this valuable.

Judah Hoover
NMLS # 132248
Lender, Real Estate Investor

-you can’t learn to swim from a book-