What is the worst place to look for a real estate deal?
The absolute worst place to look for a deal in the real estate market is on the Multi-List System or MLS. One of the great advantages that real estate investing has over virtually every other sort of investing is that the information is asymmetric, meaning that not everyone is working with the same bits of information. Conversely the stock market is a very public, very regulated market. Anyone with an internet connection can find out, not only the price of a stock but also the fundamentals behind that price. Real estate investing is totally different. Real estate investors make money from finding deals that nobody else can locate.
The MLS operates like the stock market; the Pittsburgh MLS is no different. It is full of houses priced at market price, generally determined by an agent. The real deals are scooped up before they ever hit the MLS. These deals are called pocket listings. This refers to the listing that the agent kept in his or her pocket, for their preferred buyers, rather than offer it up to the public. That is why you can’t buy a house for 100k less than it is really worth on the MLS. If a good deal ever accidentally ends up on the MLS, it will be gone within hours.
I use my local Pittsburgh Craigslist for homes for sale a lot more often than I use the MLS. My favorite place to find real estate bargains is For Sale By Owner or FSBO yard signs. These are the most likely places to find investment real estate, but that is another article.