Understanding the wholesale process, when to make an offer & afte

5 Replies

I am confused about when to make and offer and the inspection process.

I have heard, read that wholesalers are making offers, putting properties under contract right from the first phone call with the homeowner. Is this the norm? Being brand new to real estate investing, I am not skilled at figuring ARV quickly, also, I am very concerned about what if the property has asbestos, mold, foundation issues? Does the inspection contingency cover that?

Let's say you have an assignable contract with contingencies, and you have a 10 day inspection period, do I hire a contractor or a home inspector or both? 

I see the need for both of them, but that can get costly if there is a major issue and I need to back out of the contract.

Thank you.

@Wendy Busa Sadly there are several wholesalers who are dishonest and don't practice good business skills. First, never be too quick to draw up a contract. Several gurus teach otherwise, they say draw up a contact ASAP, to lock down the deal. Then locate an end buyer. I say the differently, once you locate a property, speak with the seller to get more info. Let them know you are interested and what it is you do. Full disclosure is the only legal way. Then locate an end buyer who is for sure interested and willing to invest. Then draw up the contract. Remember you are working mostly with investors. Any savvy investor should perform their own due diligence prior to investing in any market. Encourage the investor to perform their own inspection, ARV and comps. So no, do not spend your money and hire a contractor. This last thing you want to do is be misleading, providing the condition of the property or any numbers can be misleading.

Hey Wendy,

The first thing you want to do is MASTER your wholesaling numbers.

The only way to succeed in this business is by truly understanding the value of a house (ARV) - once you understand ARV's, repair estimates, etc. then you can make an offer.

When you lock up a deal, if its truly a deal then you will have plenty of investors making an offer on it. 

Most investors in todays market will move on a deal without a formal inspection/appraisal.

Best of luck.

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You can't put a property under contract from the first phone call in reality because there is always in-person due diligence being done by someone, often to reduce the price of that first "no-look" offer. If you don't know ARV or repair costs, you should not even be contacting sellers yet unless you have a partner or colleague who does. Believe a quarter of what you read about what wholesalers are doing and then take about one percent of that to know what is really happening and whether any of these "deals" even close.

Hello Joe!

I am a new Investor, actually still a student. I am writing because I was impressed with what you replied to Wendy, and am looking to connect with other Investors. Wishing you the very best in the new year Joe! 

Best regards,

I find it disgusting.. DISGUSTING when I see videos from loudmouth scam artists like Jerry Norton and "Wholesale to millions", etc. etc.  where they jump on the call and record themselves talk to sellers, and they haggle them to drop the price, property unsean, making fun of them, talking bad about them as if they are the enemy.

Yes you Youtube "Gurus" I called you out!

It is because of people like you, sellers hate us, and other wholesalers do it wrong.

You are a business... Those selelrs you make fun of and haggle them to lower the price... they are your CLIENTS!!!

You are supposed to be the solution to your clients, instead not only are you haggling them, you are rediculing them on video, take advantage of them, and you are just nasty.

You need to find a way to be the solution. Yes you have a maximum offer, but still you need to make sure their goas are met too!

And YES it CAN be done.

Look at this:

We bought this house for 10 dollars

Arv is/was $250K (now it is $320K)

It is the green house.

The selelrs goal was not to get money. Someone's mom lived there, was a hoarder, Very unhealthy living conditions and her son NEEDED her to sell and part from the house otherwise... well you get it.

We said NO.  You know why? the house dates 1850, and it is a historic home. Do you know HOW MANY issues this house will have? We said no thank you. They begged and pleaded and said please take it (for free), we have PLENTY of leads coming our way, we don't need to deal with this... BUT when we heard the reason why they needed to sell, we accepted. We did them a service. We got a house for $10 dollars, and they can move on with their lives.

Because we deal with true motivated sellers (by definition, "motivation" means that is is not necessarily about money) we can easily solve problems for true win win situations. This is something that 99.9999999999999999999999999999999999999999999999999% of investors don't and will NEVER realize/understand. And that is a HUGE mistake.

If you make an offer on the phone site unseen, you are not focusing on being a solution. Why? Well you would NEVER feel confident about that offer unless it is SO much lower than necessary because if something happens you are still in the clear. I would never buy a house unseen unless I know I am safe.

I honestly believe the way to become successful as a wholesaler (or any business) is NOT buy making a few deals with a ton of profits, but making many deals with minimum allowable profits. Not only do you get lots of contracts accepted making more money in the end, people will truly be happy with you, and that is how you grow a brand!!

So it is a double whammy.