Lets say a wholesaler lists a property at $50 and estimates it needs $20K of work with an AVR of $90k. I know we have to do our due diligence on these numbers.
Here are some questions: If you want to do quick numbers before exploring the property further (walk thru)
- how much do you rely on these numbers? What percentage of wholesalers are honest/accurate with their repair estimates?
- If you immediately adjust the repair numbers based on your experience, I would imagine you'd go up (or down), but by what percentage?
- And for you seasoned flippers/rehabbers, how accurate were the wholesalers repair estimates to your final costs?
And after doing your own estimates on the repairs, do you come back to the wholesaler saying their estimates are low and if they would lower their price? Of course they probably have the house under contract at a specific price to the original seller so that would mean probably eating into their own assignment fee.