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!