[UPDATE NUMBERS BEFORE PUBLISHING]
From analyzing 13,000 flips in greater Seattle-area since 2002, we find that on average, MLS-purchased flips sell for 1.8x their purchase price compared with 1.6x off-market and 1.4x at foreclosure auctions.
While we do not know the condition of these flips, we think if anything MLS-purchased flips are in better condition, not worse. Furthermore, off-market deals often have an assignment fee and foreclosure deals have a commission paid on top of the purchase price, which makes MLS deals even more favorable than the numbers suggest.
Our guts tell us that this feels off, and to some extent this is true. The opportunity for luck is greater in these markets, and the top 10% of off-market flips perform better than the top 10% of MLS-purchased flips. Nevertheless, the MLS still presents a meaningful buying advantage for rehab investors.
This suggest there is more supply (deals) relative to demand (competing buyers) when shopping for deals on the MLS versus off market or at foreclosure auction.
From a supply perspective, 4_% of historical flips were purchased from the MLS versus 3_% off-market and 2_% at a foreclosure auction. With more supply, the MLS can absorb more demand.
From a demand perspective, we can say there's roughly 87% of the relative demand off-market as measured by the resale multiples (1.4 / 1.6). Because there are 1.25x more deals on the MLS than off-market (4_% / 3_%), we can deduce there is about 1.09x more demand (87% * 1.25).
In other words, there is 1.09x more demand on the MLS, but 1.25x more supply to absorb it.
We can't say for sure, but we have some theories as to why there is less competition on the MLS than it might appear.
For starters, prospective homeowners cannot easily finance properties that need repairs, and when they do compete it is normally for cosmetic flip opportunities. Many sellers also over price their listings and end up accepting a lowball offer—think of it as a hidden supply on the MLS.
The demand for off-market deals is also is also higher than it appear. From intuition and the advice of others, investors gravitate to the idea that buying off-market or at the auction is less-competitive. The problem is that everyone thinks this way.
In many cases, investors are purchasing overlapping mailing listings and calling on the same FSBO directories.
This is not to say you should only pursue MLS-listed opportunities. Rather, we believe the MLS should be an active source of opportunities for serious investors. From analyzing 13,000 flips in greater Seattle-area since 2002, we find that on average, MLS-purchased flips sell for 1.8x their purchase price compared with 1.6x off-market and 1.4x at foreclosure auctions.
We apply combat theory to real estate the same way we did to war. The same attention to detail, the same preparation and planning, the same tactics and theory we applied in war, are translated and applied here to your situation in housing. Dozens of combined years of combat service in Operation Iraqi Freedom, Operation Enduring Freedom, and countless other campaigns taught us how to win a war. Make no mistake, the difference between the war in the middle east and real estate is only a matter of whether bullets are flying… and obviously it's a slightly different mission. Many of the same elements are present though. We have an area of operation, a set amount of resources, friendly and opposing forces, and we have a mission… So, what does all this mean for you? A competitive edge over other buyers, other agents, and other parties in general who aren’t looking at real estate through that lens. It gives you a housing advantage others don't have.
A road map is our equivalent to a mission plan. Our roadmap produces unique routes specialized to your situation. Our specialty is understanding what detours can be expected, and how to offset or eliminate problems to ensure you have the smoothest experience; this is an essential tool for the overall success of this process. Buying or selling a home is the biggest financial decision of your entire life, doesn’t matter if it’s your 1st or 10th. Your guide should have done proper planning and thoughtful research. We build roadmaps for our clients every day. What will yours look like?
We sure do! Turning your home into a cash flowing asset is something that we’re quite passionate about. We believe in building a portfolio of passive income, and we’ve constructed that roadmap for you. “Silver Platter Property Management” includes tenant selection and management, property maintenance, rent collection, and everything else in between. This gives you confidence to execute the next chapter of your story. Your property is in good hands, with positive cash flow for years to come. We have robust systems, and our management team are veterans and landlords themselves. We understand what it’s like to own houses while serving in the military, and what level of care is required when you can’t be there to manage it yourself. Isn’t that what brothers are for? We’ve got your back.
It might be faster than you think! Although this may vary depending on your market, the average closing time for a transaction is 30 days, which starts the day the seller accepts your offer, to the day we are handing you the keys. The fastest we’ve ever closed a VA transaction is around 21 days, and the longest is 40 days. Factors that can affect this timeline are the appraisal, how fast your docs are processed by the lender, and when the seller wants to close. We do everything we can to build the entire process around your timeline, especially when you're under pressure to get housing.
Most of the US is currently a seller’s market. Houses often close quick and for more than asking price! Once the listing goes live, it’s an average of 35 days to get the final net proceeds check from escrow. It’s very important to understand what can disrupt this timeline. Buyers can lose financing, inspections can reveal unknown problems, appraisals can come in low. Our roadmap allows you to navigate these obstacles with ease. Fortunately, as a seller, heavy competition and low supply will likely present you with many buyers to choose from. We are experts at selecting the right buyer who will get us to close, not just the offer that sparkles the most.
YES! In 2019, we started adding moving trucks to our fleet just for YOU. And, it's yours to use for free when moving locally! We cover the rental fee, insurance, and mileage. All you have to do is fuel it up when you’re done! So, forget about U-haul, we’ve got you covered. Enjoy this extra perk of working with us!
Operation: Red Dot hires Veterans, and direct dependents of veterans (meaning spouses and working age children). We believe the military has a large impact on our company's culture, drive, and strategic approach to business. Red Dot is a Veteran owned and operated company. Who better to contribute to our mission than those who wore the uniform with us? Veterans understand how to live by core values, how to be adaptable, and how to serve others first. Those are the kind of team members you'll find here.
Red Dot currently serves Joint Base Lewis McChord and Bangor Navy Base in Washington State. We aren’t stopping there though. We have our eyes set on 75 of the biggest military installations around the country. We strive to be a household name in military housing. Be on the lookout for expansion announcements coming soon!
That is a great question! We’ve heard many service members complain about the on-post housing office and their management of on post housing. Except we haven't just heard it, we lived it. This is extremely frustrating knowing that our Brothers and Sisters aren’t being taken care of the way they should be. It is our intent to bid for government contracts to manage government housing on the military installations we serve. We are a registered Service Disabled Veteran Owned Small Business, and will actively pursue any opportunity to serve our active duty Brothers and Sisters.
No, Red Dot is open to the public. We will serve anyone who would like Red Dot to represent them. There are some programs that are exclusive to the military demographic, like the lease/option program, but overall our solutions are open to the public.
If you are amazing, we want to know. Here is a list of current openings, and we are always open to unsolicited pitches.