What due dilligence should a wholesaler do?

Question

People who have bought from wholesalers or wholesaled what do you think?

Should they make sure permits were pulled? Check for violations with county? Have any actual inspections done? Provide a scope of work for buyers?

I can tell you that I personally have done a mixture. I have taken care of violation fines out of profits as a term of sale, I have provided a scope of work, I have passed on septic inspection footage, etc.

My thought is that while it may make it easier to wholesale the home it could come back to bite you. For instance if you provide a scope of work and there are things that were unaccounted for your end buyer could feel "cheated".

What do you guys think?

John Hixon · Answer

Ryan Dossey

That's not a bad idea.  I think a lot of new investors would like a scope of work attached.  It might give them a road map so to speak.  But, the only issue I have is what several large wholesalers in the DFW area do is they send a scope of work but the estimate is way off.  They might put down that the house needs $20,000 but in actuality it needs closer to $30,000 +.   So, that automatically gives them a bad rep in my book.  But, I guess as long as you can get accurate scopes it would probably be a nice addition.  Probably want to add some type of disclaimer about from what you saw this is what needs to be done.

Jacob Michaels · Answer

Although it would be nice to have a detailed scope of work, I often will just provide what basic info I know about the property to the buyers and let them look at it and make their own decision. I tell them what I know and make no representation more than that. I often don't even give a repair estimate, because I could be off on the numbers. Just the basics.

They understand this, and they do up their own assessments based on their eyes. Haven't had a problem with this.

Lisa Thoele · Answer

As a wholesaler is it a good idea to have a sewer scope and home inspection and provide that to potential "buyers?"  I am jumping into the wholesale scene and was just curious as to what the normal course of business is.  I have purchased from a wholesaler and nothing was provided - I wasn't even able to get into the house until after I purchased it.  It worked out but I would have appreciated more info on condition.

What due dilligence should a wholesaler do?

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