Don’t Trust What You See or Read on the MLS!
Is that a bold enough statement for you? Over the years, I have just learned to trust very little information that is supplied on the
Minnesota MLS when it comes to investment property. Typically the only items that are correct are:
- Address
- City
- Price (usually-see below)
- Taxes
Even then, I have had one occasion to find the price was actually wrong! My customer put in an offer, that I felt was reasonable, on a house in North Minneapolis. The listing agent eventually came back and said that they had recently dropped the price on that house by mistake and it should actually be $20,000 higher! I told her I thought the wrong list price was actually the true market value! Unfortunately, she didn’t honor the price so we passed on the house.
Otherwise, NEVER trust the following items in the MLS for Investment Real Estate:
- Rent
- Square footage
- Owner expenses
- Bedroom count
- Age of house
As part of our process to purchase investment properties, we research each one of the above items (and more). Now I don’t want to criticize my fellow real estate agents, but I am not sure if they are simply lazy, they don’t really understand how to input an investment property in the MLS, or maybe they are just not investment property real estate agents. Either way, never trust the information.
Here is a great example of bad information. My customer found (and we toured) this property which was located in a part of Minneapolis at a typical price of $32k. The buyer knows that at that price, it was going to take some rehab to get the property in shape. When I booked the appointment, they told me their was a security system on the premises that I had to deactivate. At this point, I am thinking it must be pretty nice inside to keep a security system running on a vacant property.
We started our tour of the property, driving up to see a cute looking house in a nice neighborhood (I have removed the address to protect the guilty). On the kitchen counter was the below marketing brochure saying that a buyer could “Move Right In”.
(Click on the pictures for larger versions)
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| Only Picture on MLS (not bad looking) | The marketing sheet on the counter says “Move Right In” |
That is about where the cuteness ended. The house had all the copper stolen, plastic keeping out the rain on one window, no appliances, a nasty kitchen floor, a bathroom ceiling that was falling in, and a pile of pigeon dropping almost 24″ tall on the totally shot roof. See pictures on this disaster house that you can have your tenant “Move Right In”:
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| All the windows needed to be replaced. | Do you think this kitchen is move-in ready? |
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| An 80 year old rusty boiler. | Ceiling falling in from a leaking roof. |
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| Think that plastic on window will pass a | Yes, that is a 24″high mound of pigeon |
| Section 8 inspection? | droppings! |
After being through this house, I was almost tempted to start another stupid property repairs category and call it stupid investment property marketing!
Are you searching for investment properties on your own and running into similar properties?
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Doesn’t the RMLS have some sort of standard and method of reporting misrepresentation? When looking for my first property we found many listings that i’ll say at best were “optimistic” about the spread between what was stated and what was true about a listing. I would think that realtors would respect each others time more than drawing them to listings based on false pretenses. My own realtor said that it was just part of the job to get people in.
It should have said…”Home recently bombed out? Relocating from a civil war torn nation? Then you will find this home to be move-in ready!”
Seriously, though. It’s amazing how many agents don’t know the difference between north and south, east and west and that you can only go one way on a one-way street. Have they ever visited their listing?
John-
It is not really misrepresentation in a fraud sense. Plus at the bottom of every single MLS page it will say “Information deemed reliable but not guaranteed”.
I think most are just inept. I saw one listing today for a duplex that listed in the “Units Like This” box (which means how many units are identical to these specs) had the number 8. He meant that there were 2 units with 4 bedrooms each. He put 8 in this box! Tell me that doesn’t throw your cash flow calculations off if you are relying on the MLS numbers!
Chris-
Great comment. LOL.
I think the REO agents really don’t see their properties. Since they are only making about $400 on each one, I seriously believe they pay some $8/hour guy to drive out, change the locks, put a sign in the window and call it a day.
I think that REO agents should examine their properties first before dealing with them,otherwise it would be a misrepresentation.
thanks for sharing this info! be lated happy birthday!
So true, I have run into the same issues on mls of brokers making mistakes or deliberately making their listing look better to attract customers. I always make sure to talk to brokers in detail before making an appointment for a showing so as not to waste my time.