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Lesson 11 - How to Use the MLS
Lesson # 11 How to Use the MLS By:
Ron Mead Ron Mead Training This lesson is for paid members only. If you have not paid, this is piracy, and not the fun kind. Please register or get the Free Trial at Share Your Thoughts:
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Lesson 11 - How to Use the MLS
Lesson #11
Let’s Review
Hopefully you’ve been able to get out and view quite a few houses by now. You
should be getting a pretty good feel for property values in different
neighborhoods in your town or city. You’ve probably also had an opportunity to
talk with several real estate agents and they’ve helped you become more familiar
with current market conditions.
We are now approaching the halfway point of this course so I am going to give
you a little breather this week. I know we have covered a lot of ground in a couple
of short months so please take this week to review the first ten lessons and make
sure you understand everything and be sure you’ve completed all the short
assignments I have provided for you.
By visiting houses that are for sale, as I mentioned, you can get an idea of the
current selling prices for various homes. But there’s another resource that may
be able to benefit you.
Multiple Listing Service
The Multiple Listing Service (MLS) is a database service developed by, and
exclusively for, real estate brokers and their agents. If you elect to tap into this
service, it can provide you with a detailed picture of what has transpired over the
last year or so, and give you a snapshot of market activity.
To access the MLS, you will need to connect with a cooperative real estate agent
who subscribes to the service. But don’t worry, 99.9% do! This real estate agent
can be an invaluable asset. With him/her using the MLS, you can find out some
key areas of information for homes that have sold (e.g. square footage, price per
square foot, property taxes, year built, sales price, days on market, features and
amenities, etc…). All these can give you insight when you are looking at homes
you are considering purchasing.
One of the biggest challenges new investors have is determining the value of a
home they are thinking of buying. This is especially true in today’s market of
declining prices. What was true just 12 months ago may not apply today. There
are so many factors that make each home unique, but I like to look at one ratio to
try to level the playing field.
If you are comparing houses in the same or like neighborhoods, cost per square
foot is one measurement that can help you compare apples with apples. Let’s see
how cost per square foot is computed.
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Lesson 11 - How to Use the MLS
Computing Cost per Square Foot
For a very basic example, that has easy math, let’s say you are looking at a house
that is 2,000 square feet and the owner is asking $100,000. To compute the cost
per square foot, you would take the selling price, $100,000, and divide it by the
number of square feet in the house, 2,000, and the result would be $50/square
If that same house of 2,000 square feet was for sale for $200,000 the cost per
square foot would jump to $100/square foot. So the simple formula to compute
the cost per square foot:
Divide the selling price by the number of square feet in the house.
Now, let’s say you are looking at house that is 1650 square feet and you are
thinking of offering $145,00. You’d like to see how it compares to other houses in
the neighborhood that have sold in the last 4 months. If you divide the possible
purchase price of $145,000 by the square feet, 1650, you come up with a cost per
square foot of $87.88.
Next you can meet with your new best friend real estate agent and ask if they can
use the MLS to tell you what is the cost per square foot of comparable homes
selling in that neighborhood. Let’s say they come back to you and tell you that
comparable homes have been selling in the $110-120/square foot range. That
indicates that you are in pretty good shape with your offer; however, if they tell
you the range is more like $65-75/square foot, you might want to reconsider. You
might be a little high.
One word of caution: Don’t make this cost per square foot your sole determining
factor. It’s only one guideline of many. It’s simply a very quick way to see if it’s a
property that might be worth pursuing.
So there are some ways the MLS can assist you. It may take you a little while to
find a real estate agent to work with, but in today’s market most are quite eager to
help if they feel you’ll be sending business their way in the future.
As I said, I’m keeping this lesson short to give you a chance to catch up. So that’s
all we are going to cover today.
See you next week!
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2011 Ron Mead Training - All Rights Reserved
Lesson 11 - How to Use the MLS
This Week’s Activity Please do a brief but complete review of the previous 10
week’s lessons. We’ll want to make sure you are
on top of everything for the next phase of lessons.
Be Happy, Take Chances, Live Life Fully!
Fortunes and Freedom: A Guide to Real Estate Riches Next Week - Lesson#12
“Using the Classifieds and Craigslist”
Get Connected and Stay Updated
Be a true friend and send someone a Free Trial
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2011 Ron Mead Training - All Rights Reserved