Okay, let’s say I find my 1st property, and get it under contract. What information do I need to have in place before going to my buyers? Also, once I have a house under contract should I have my lawyer review the contract right away? Lastly, should I have my own title company, or does the buyer typically use theirs?
A lot of questions and the answers could vary so I will answer from my perspective.
You should have the contract reviewed before signing it or introducing it to the seller. Either get a contract from an attorney or a title co. Many wholesalers have their own go-to title company. Before you go to your buyer you need a signed contract, comps to support the price you are asking, and a repair estimate which you should have to determine your offer in the first place. All buyers should do their own due diligence, but if you deliver quality numbers you can increase your serious buyers list and they will want to work with you. I do know wholesalers who do not provide any of that, but I would.
The best advice i could provide is to be as honest as possible and disclose everything you see in the for of repair estimates. Keep in mond, why hide something if the buyer will have to see the property anyways. This also helps elimanate tire kickers. If you disclose the worst aspects and most expensive repairs and you only get 3 calls out of 100 on your buyers list then 9 times out of 10 you have 3 serious buyers and those are the ones that count.
Buyers always have worries and the worries come in the form of evaluating risks so advising of potential rode blocks early on is good for business here are a few of the major details you want to provide.
Accurrate repair cost- walk around the property and jot down what needs to be done, windows, trim, paint, doors, kitchen, counters, bathrooms, shower doors, toilets, sheetrock, demolition, roof repairs etc.. just write it down and provide a repair estimate with a list of what needs to be done. a tenured investor can look at the list and instintly tell were you numbers are. if you say new roof needed estimate $2,000 they they will think your off.
Structural Damage- is the roof sound, is the foundation settle, cracked, or shifted,
WDO- is there termite damage in the property?
chinese drywall- has the home been inspected for chinese drywall you could estimate repairs at an ok number but chinese drywall would increase that amount by a lot do to it becoming an entire gut project.
liens, code violations, judgements- are there any major liens that can effect the sale or judgements that can transfer to the buyer? Are the taxes up to date are the in default of mortgage.
parties all present- make sure all owners are accounted for and in agreement to sell and on contract.
Thank you both Tyrus and Manny. That information helped alot, and I will put it to good use. However, I do have one more question. As a newbie investor when it comes to estimating repair cost should I use a contractor or try to find a seasoned investor who would know the average repair cost of different items?
This two depends on who you ask. For me as a newbie I would get with experienced rehabbers who can generally estimate the repair costs. If you cannot find a person who is willing to do a few walkthroughs then get a few estimates by different contractors and ask them why they price x for y.
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