I am currently looking into a wholesale deal in Philadelphia. I am a first time buyer so I want to make sure I ask the right questions if I decide to buy from a wholesaler. I am currently looking into a wholesale deal but I only have the following information: Price, sq. footage, clear title (will do a title search on my own), pictures, buyer pays for transfer tax, they are looking for a 1 week settlement. I am planning on contacting them and requesting the following information, I know I have to do diligence on my own but figured I should ask for these numbers and then try to compare to my estimates:
- ARV - What is the your estimated ARV and can you provide me with the comps you are using?
- Repairs - Do you have an estimate of repairs needed? What are kind of repairs are you including in your estimate?
- Can an inspection and appraisal take place before closing?
Any other questions or things I should keep in mind when requesting information about a deal from a wholesaler? Thank you, any advice is appreciated.
Bring in your own contractor for estimates on repairs. When it comes to comps, I would suggest running them on your own or with the help of a trusted realtor. While working with wholesalers can be beneficial (I know a many respected and reputable ones) an inexperienced wholesale practitioner can be a major detriment.
@Maricruz Romero run your own comps, bring your own contractor, bring everyone you need to make a decision at the property. Only start trusting wholesaler comps once you've developed a relationship with them and it is apparent that they are not in it for a one off deal.
Full Disclosure- I AM A WHOLESALER AND AGENT
1) Be careful of comps, there are certain borders you do not cross in Philly. Keep it tight. Blindly trusting ARV's can often result in you seeing more value than there actually is.
2) Never trust a wholesaler rehab estimate. 99% of wholesalers are not licensed GC's or have in depth experience in Rehab Estimates. Yes, there are general rules of thumb what MOST contractors will come in at for shells or general cosmetic jobs per pocket but its always better to have you GC in there to be your trusted set of eyes. That being said, make sure its a GC that is actually worth your trust because some will milk you drive with rehab budgets that are way too high.
3) A one week closing is tough for an appraiser, even for most hard money lenders. If you're going conventional then there is no way this is closing. For hard money, it will all come down to how good your appraiser is at getting in there and rushing the report.
Find out who the title company is that they have clear title with. See if they are reputable or have a track record of closing on deals that end up with Fraud.
Good advice above ARV and rehab costs. In addition to doing your title search, which I always do since it takes less than a half hour, make sure Contract (the one you are being assigned, or the back end of a double close) calls for clear title and the ability to get title insurance.
@Wayne Brooks how do you run your own title search? This is something I typically use a title company for.
@Rene Doyle It takes knowing Where and How to look, understanding and interpreting What you find. I read your post as you were doing your own preliminary search, a title company is definitely the best.
@Wayne Brooks thanks!
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