Courtesy of Dion McNeeley
Real-estate investor Dion McNeeley used to prioritize speed when making an offer.
"The first 10 years of investing, I wanted to be fast. I wanted to get an offer in within a day or two of a property hitting the MLS," the veteran investor told Business Insider, referring to the multiple listing service.
Now, with a 16-unit portfolio that generates enough cash flow to more than cover his lifestyle, McNeeley is less focused on acquiring properties quickly and more concerned with finding the best deal. To do so, he's paying attention to one specific metric: the number of days a property has been on the market.
Generally speaking, the longer a home has been on the market, the more motivated the seller will be. "Long" is relative to the average time a home sits on the market, which varies by location. In some areas, the average could be 10; in others, it could be 30.
McNeeley, who studies his market in Tacoma, Washington by looking at listings daily, knows that the average home sits for six to nine days, at least in December of 2024.
His rule of thumb is to take the average and triple it. That's the number you're looking for when looking at listings. In his case, he rounded up the average to 10 and is looking specifically for homes that have been listed for at least 30 days.
When he comes across a property he likes that meets his days-on-market criteria, he makes an offer that will get him the return he's looking for.
For example, the latest property he purchased — a duplex that needed a lot of work done — had been on the market for over 100 days. It was listed for $500,000, but based on the renovations McNeeley would need to complete, he calculated that the deal would only work if he could buy it for significantly less. BI verified all of his property ownership claims.
"I offered 400,000 because that's the number that made sense for me," McNeeley said. His offer initiated a two-month negotiation. "I never moved from 400. It went from 500 to 477 to 444 to 422. When I got another offer accepted somewhere else, I contacted them to say I was pulling my offer. They said, 'We'll take your 400.'"
If you're going after a home that's been on the market for longer than average, there may be something wrong with it, and it's important to do your due diligence. Or, it could simply be listed poorly.
"Maybe the agent was lazy and took bad pictures or doesn't have it listed correctly," said McNeeley.
In his case, it was a bit of both: The property, which he purchased in July 2023, ended up needing $62,000 worth of renovations, which he was prepared for, and it wasn't what it appeared on the listing. It was listed as a single-family home but was actually a duplex, which he found out by calling the gas and utility companies and asking how many meters there were.
"It had two meters for electric and two meters for gas. Everything about this was duplex, but the picture looked like a house, and the realtor listed it as a house," he said.
Talking to the gas company, he learned that the gas hadn't been paid in months and had been shut off, further indicating that he could be working with a motivated seller.
"That's one of the reasons when I offered 400,000, I didn't raise the number," he said, figuring, "If the seller has to sell, they'll take my number. If they don't have to sell, they'll just leave it listed, or they'll take it down and not sell. So, you're not always guaranteed to get a low offer accepted. Sometimes people don't have to sell — they are just willing to for a higher amount."
