Wholesalers and Rehab Costs

[Quintinn Payton]

Hello Everyone, 

This post is strictly being utilized as a form of constructive feedback for both new wholesalers and people that may be interested in becoming wholesalers. Throughout the past week I have read a few discussions that pretty much have spoke negatively about wholesalers; more specifically new wholesalers. The problem has been stated that new wholesalers have been pretty horrible at estimating rehab costs when it comes to properties in an effort to quickly close a deal and try to get a large assignment fee in the process without doing true due diligence on the property. Is it a better idea to get a contractor to estimate rehab costs or should the wholesaler just take the time to do the necessary due diligence on the property when it comes to rehab costs?

[Greg Scott]

If the wholesaler wants to stay in business, they will make sure their cost estimates are realistic.  But, it is up to the buyer to verify those numbers.

I once went under contract on a house that looked great on paper. It was a hot market so I had to put $3K cash non-refundable deposit. Before I did that, I confirmed ARV, but to get the deal, I had to move fast so did not have time to validate the rehab budget. Turns out this wholesaler was way off on the rehab budget. Their $25K rehab should have been $50K. I got out of the deal but lost my $3K.

The same wholesaler came to me with another deal a month later.   A bit smarter, I made sure I verified the rehab and it was almost an identical situation.  Needless to say, that wholesaler got crossed off my list.  He must have gotten crossed off everyone's list because I soon stopped getting any emails from him.