As a real estate wholesaler, your success largely depends upon being able to find an end buyer for your deals once you have them under contract. As I mentioned in my article last week, if you have a wholesale deal that you’re having a hard time finding an end buyer for, the problem can usually be fixed by either 1) lowering the price, or 2) doing a better job of marketing the property.
Sometimes, however, even though you’ve done a great job of marketing the deal and the price seems to be in line with the recent comparable sales, it still won’t sell. If you find yourself in a similar situation it may be because of one or more of the following reasons- all which can have a negative impact on the marketability of your deal:
- Location, location, location: If your deal is located on a busy street, across from the neighborhood liquor store, or right next door to a cemetery or the railroad tracks, chances are you’re going to have a much harder time getting rid of it. This is something that you need to take into consideration when you’re running your numbers and formulating your offer. While it may seem like a great deal on paper, if the property is in a crappy location it’s going to decrease your chances of finding an end buyer for it.
- Major repairs: While there are some rehabbers who have no problem tackling major projects, keep in mind that your pool of buyers will be much smaller if the rehab needed for your deal is an enormous undertaking. Just to give you an example- in my market (Tampa, FL), sinkholes are a common occurrence, and even though you can score some huge discounts on sinkhole properties, the number of investors who are willing to take on that type of project is very small.
- Funky or chopped up floor plans: Unfortunately, not every homeowner has the sense to hire a competent professional to do their remodeling for them, and instead elect to take matters into their own hands. The results, while often comical, can result in major problems when it comes time to resell the property. If, for example, you have to walk through four bedrooms to get to the one bathroom in the house, or if the kitchen has been relocated to the master bedroom (I’ve actually witnessed this), you’re going to have a much more difficult time finding an end buyer to take down the deal.
While there are many factors that can have a negative impact on your ability to get your wholesale deal sold, the three I mentioned above are definitely worth keeping in mind the next time you are considering putting a property under contact!
Photo: jscreationzs
Related posts:
- Why is Your Wholesale Deal Not Selling?
- How To Make $70,000 Off A Real Estate Wholesale Deal
- How to Close REO Wholesale Deals (Part 5 of 5): Using a Land Trust
- Three Easy Ways to Build Your Wholesale Buyers List (Part 2)
- REO Wholesale Deal: Step by Step
Article Author: Stephani DavisStephani has written 47 articles for us.
Visit Stephani's Website: http://www.flipthiswholesaler.net/
Formerly a bartender, Steph Davis is now a full time wholesaler in Tampa, FL. If you'd like to get an idea of what it's really like out there in the trenches, head on over to her blog: FlipThisWholesaler.net!
Joshua Dorkin
{ 4 comments… read them below or add one }
Steph, thanks for sharing. I agree with the major rehab work needed for properties. Most of my buyers prefer a no brainer deal with minor work needed. Location is key, and where I’m at, you either have a ocean view, mountain view, or someones garage view.
Great post
You can say that again! Great points. Hopefully people can focus more on the front-end so that they don’t have to have as much of a headache later.
Thanks Steph,
It seems a lot of gurus are touting wholesaling as a great way to get into investing, but I think it can be very challenging for many newbies because thay have to get something under contract for EVEN less than an investor wants to pay and often they don’t take into account certain investor expenses, such as ALL of the holding costs, the funding costs (for say, six months), Realtor commissions, seller concessions/requests and when it comes to figuring what the rehab is likely to cost, this is ususally on the low side because they’ve missed stuff out and haven’t added in a 10% number for unknown issues/punch list items. When you add all of these up, they represent a sizeable chunk of the deal and if the wholesaler hasn’t allowed for them, their price will be too high for an investor to buy. I’m often surprised at how low our offers have to be , but that’s what you’ve gotta do to avoid being disappointed at the size of your back-end closing check……
Happy investing!
Richard
Hi Stephani ,
In the wholesaled homes I have appraised for investors / banks it seems the wholesaler has a following of investors and already knows what they are looking for and has an idea of what they will pay. This takes the guess wrok out of “when will it sell”.