Getting a wholesale property inspected before putting on contract

7 Replies

I am having a hard time figuring out how to get a wholesale property inspected or repair costs verified by a general contractor before I put it on contract. 

1) First difficulty is finding a good contractor to look at it before it's under contract since the good ones I know wants it to be on contract first. 

2) The second difficulty is what if someone else puts it under contract while I am still having it looked at? I would be wasting the money I paid to have the contractor look at it.

How have others gotten around this hurdle?

Hey Ben,

Are you not allowed to have an inspection contingency in your offer? If you can, I wouldn't spend the money on an inspection or anything like that until you can get it under contract with an inspection contingency. Then you have recourse to back out later or renegotiate if the inspection finds problems beyond what your offer expected.

If you can't have an offer accepted on this property with an inspection contingency, maybe this just isn't the best property for you at this time. I know there are some people who are pretty confident in their abilities to spot a deal and close on it without an inspection, but that's definitely outside of my expertise!

Thanks Zach. I am working with wholesalers and they do not allow inspection contingencies. Do some wholesalers allow inspection contingencies?

Originally posted by @Ben M. :

I am having a hard time figuring out how to get a wholesale property inspected or repair costs verified by a general contractor before I put it on contract. 

1) First difficulty is finding a good contractor to look at it before it's under contract since the good ones I know wants it to be on contract first. 

2) The second difficulty is what if someone else puts it under contract while I am still having it looked at? I would be wasting the money I paid to have the contractor look at it.

How have others gotten around this hurdle?

 The 1st problem will be solved by you paying them more for their time. The 2nd problem is why people write offers contingent upon inspection..........On a side note based on your wording of this thread it appears to me that you don't actually have the intention on closing on this house at all anyway. If that's true it'd be mighty fine of you to not do any of the above and move on to a more legal business venture.

I think you need to figure out repair costs on your own. You're going to have a tough time if you need to wait on a contractor. Also if you bring a contractor to a few of these properties and they don't get the job, they will most likely stop coming. 

Originally posted by @Ben M. :

Thanks Zach. I am working with wholesalers and they do not allow inspection contingencies. Do some wholesalers allow inspection contingencies?

I think it would depend on how hot of a market you are dealing with. If there aren't many people interested in the property, a wholesaler would have to consider an offer that has an inspection contingency otherwise they risk holding the property longer than they anticipated.

However, if you're in a hot market (and who isn't these days), you may be competing with people who are willing to go after the property so aggressively that they drop all contingencies; this would represent less risk to the wholesaler of the buyer backing out so naturally they would likely choose this offer over yours with contingencies.

If you're finding that all deals you're coming across do not allow contingencies, it may be valuable to spend some time learning how to expertly predict repair costs on your own so you can determine if a deal is a good one without paying for inspections before getting it under contract. (Here's a link to J Scott's book on the subject if you haven't picked it up already)