I read a post somewhere where someone that I will suppose is a wholesaler was offering a property for sale to investors that he had never seen.....and from what I read, had no intentions of ever going to see because it was too far away from him and was not worth his time to go and physically look at.
Eeeeh.....bad strategy and more so a really bad idea. In my opinion, your credibility is shot as a wholesaler if you cannot even take the time to go and look at the property that you will be offering to investors. Now, I am not professional home inspector but your 5 senses thoroughly engaged will give you a good sense of a property IF you physically go there and take a look. Just off the top of my head, two very valuable things you will learn are:
- What kind of neighborhood is your subject located in? (e.g. is your subject located next to a liquor store or are the properties to the left, right, front and rear of the subject vacant and boarded up or is it located behind a gas station or is the neighbor's yard full of miscellaneous junk and 5 inoperable vehicles all supported on cinder blocks or is it a nice quiet neighborhood where everybody has a manicured lawn).
- The smell test - once you walk in the front door of your subject, despite the pretty pictures on the MLS or on Craigslist, do you have to have CPR because you immediately collapsed to the ground unable to support your weight...overcome by the aroma coming from the interior of the subject?
While I could think of more reasons why you want to physically visit your subject, I will leave it at those two for now. Trust me that those two reasons alone would definitely factor in your decision to move forward or pass on the deal or to significantly reduce your offer price if you choose to move forward.
Now, do I make or have I made sight unseen offers before? Yes I have, but if and when I do, I low ball them to get my foot in the door and then I try to go and take a look as soon as I can - especially if I get a counter-offer. The point is, in my opinion, ALWAYS get your eyes or the eyes of somebody you trust if you cannot physically get to your subject as soon as possible preferably before you even make an offer.
Case in point. Just a couple of days ago, I went to take a look at a SFR property that was being offered for $266,000.00. I had not made an offer, I wanted to first take a look at it. The online photos looked great, the satellite photos of the subdivision looked great. The subject, once I got there looked great and I was thinking to myself...yay, sweet deal!!!....until I got to the basement. There was a definite odor in the basement and closer inspection revealed a bunch of mold on the floor joists and the bottom of the sub-floor viewable when you look up when standing in the basement. I would say that approximately 40% or more of the floor joists and viewable sub-floor had mold.
THAT had an almost immediate effect on my good feelings about the property and definitely changed my attitude on my offer because now, I had to factor in mold remediation and/or basement water-proofing into my offer equation which you guessed it...translated into a much lower offer than I would have offered...sight unseen blissfully unaware that there was a mold issue.
Feel free to share any sight unseen stories or horror stories. Thanks for reading.
Many investors make sight-unseen offers, then go look at it and nail down the final numbers when it's in inspection contingency. It's more of a numbers game, and many of these investors cannot go drive to see every property.. BUYING sight unseen is MUCH MORE RISKY, IMHO.
Over the last 4 years I have placed at least 50 offers on properties I had not seen. I purchased 9 last year. I would still purchase a property unseen, heres why
a) if the purchase will be secured by borrowing, it doesnt matter how much I like it, if the lender thinks it is not good security they will not lend.
b) With google maps and other online statistics you can learn about a neighbourhood, the distance to get there, the sort of cars parked on it etc without going through the length of visiting.
I personally would really only need to see a property if I was looking to live in it.
Good for you.
I personally do not have that high of a risk tolerance to actually go beyond a sight unseen offer and actually purchase a property that I have not physically visited and set my eyes on.
While I do use the online resources, the data especially on the satellite imagery and street views is only as good as the last day that the image was captured....which may be months or years ago. Next time you do a street view especially on Google Maps, type in an address you are familiar with. Then look on the bottom left... it will have an image date. That is how good your data is for that street view. I just did that on two addresses I am familiar with and the image date for both is September 2011 on Google Maps. Bing does not date the image but appears to have more recent imagery. It is however, at least 4-6 months old since it shows leaves from the fall on the ground. A lot can change in 4 months to 2.5 years if that is what you are relying on.
The live, real time sights, sounds and SMELL......especially the smell of a property are a big deal for me since I cannot smell the photos. That is just me....I like getting into the details of things.
Updated over 4 years ago
Hi @Annunciata R. I did not know how to tag when I replied to your comments so I don't know if you read my reply. Just wondering if you would still buy sight unseen even if the online satellite photos are usually outdated.
Sight un-seen offers in my area pretty common. Phx has a lot of new builds and cookie cutters homes, if a model match sold quickly then I have pretty good idea what my home will sell for. I know back east, the neighborhoods are not setup this way, but once you buy a certain number of home and need to ramp up volume, visiting every property is a big time waster. If I have my doubts, I will send my PM out there or view it myself but in most cases most are bought sight unseen or off the MLS pics.
I make sight unseen offers on properties I am looking to rehab, and i work with wholesalers that may never have been to the property they are trying to sell me. So long as everyone is up front I don't see it being an issue.
My market is too competitive, and my time too thin to go look at every single house listed on the MLS that we make an offer on. By the time i get out there to look an offer is already accepted in many cases.
@Justin S. I don't necessarily have an issue with making sight unseen offers because I have done so and will do so if I really want a property. I just find it easier to do my homework up-front as soon as possible and then make an offer in which I am not just plain guessing at repairs and with as few contingencies as possible if I feel pretty good about the deal.
@Sam Craven I hear you..... if you are in a market as hot as yours, I guess you've gotta do what you've gotta do.... and yes if the wholesaler is up-front about the fact that he has not physically looked at the property and all parties are OK with that then I also do not see a problem. The wholesaler I referred to in my post, from what I read and understood did not disclose that he had not physically looked at the property up-front. The investor somehow had to dig that information out of him. That is what I had an issue with.
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