Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
I'm not a wholesaler, I'm a potential buyer. I called the utility co. and the property I'm going to see has the power turned off right now. Is this the norm when buying from a wholesaler, and should I go ahead and put down my deposit (if I like the place) without having the power on to test it? What is the best way to handle this? Thanks.
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y
It's probably REO, so the electricity is usually off (unless there is very good reason - I went through one that had a sump pump running continuously even though the weather was and had been dry; I suspected a spring of some sort was pumping water into the basement). Something to get used to in this time of numerous REO properties ...
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y
It's probably REO, so the electricity is usually off (unless there is very good reason - I went through one that had a sump pump running continuously even though the weather was and had been dry; I suspected a spring of some sort was pumping water into the basement). Something to get used to in this time of numerous REO properties ...
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
14y
Bienes, it all depends on the seller and what is going on with the specific property. I have been in many REO properties where the utilities where on and I have been in some where they were off.
Some banks will turn them on for your inspections while others will not. Find out from the wholesaler (as he/she is not the current owner of the property) if the bank or agent can provide utilities for inspection.
You should not buy without having utilities on for your full and complete inspection. They could have pipes clogged by cement, AC that does not operate, or any other number of issues that can be hidden with utilities turned off.
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
14y
This is not REO, I think it's a short sale, unless the appraiser website hasn't updated the owner information yet.
I don't think this group provides a real inspection period--I can come by and see the house but I do not get an inspection period like you would with a bank--there is a $2000 non-refundable deposit to hold the place.
I'll see if they have the power and water on. If they don't, I don't feel comfortable putting down the deposit.
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
14y
The house was seriously trashed, and they wanted 10% of the purchase price as a deposit (non-refundable) to hold the place, no inspection period. The utilities were not turned on. I decided not to make an offer, it seemed too risky.
Are these normal terms in dealing with a wholesaler? It seems like a huge amount of risk on the buyer's side.
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
14y
Actually, I found out this is not a wholesale deal (although this group of people normally does wholesaling and I did buy one other rental through them about a year ago--I don't feel they ripped me off on that other deal).
Apparently they own this house outright and are trying to flip it (is that the correct term for an unrehabbed house?).
Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
14y
If they own it, then why won't the seller (the owners you speak of) get the utilities turned on to help it sell? Maybe they have some suspicious reason to keep utilities off ...
Commercial Real Estate Lender / Syndicator · Dallas, TX · Member since 2011 · 888 posts · 309 votes
14y
Anyone ever looked into connecting a generator at the electric meter? Pull the meter (if it's there), connect the leads, crank up the generator. Doesn't seem like it would be that hard, and it's not like you would be powering the whole house. Just enough juice to test one system at a time.
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
14y
Originally posted by Carlos F.:
Anyone ever looked into connecting a generator at the electric meter? Pull the meter (if it's there), connect the leads, crank up the generator. Doesn't seem like it would be that hard, and it's not like you would be powering the whole house. Just enough juice to test one system at a time.
It's a nice idea,but I'd rather just have whoever is selling the house turn the utilities on (I don't think it's too much to ask)
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
14y
Originally posted by Bienes Raices:
Originally posted by Carlos F.:
Anyone ever looked into connecting a generator at the electric meter? Pull the meter (if it's there), connect the leads, crank up the generator. Doesn't seem like it would be that hard, and it's not like you would be powering the whole house. Just enough juice to test one system at a time.
It's a nice idea,but I'd rather just have whoever is selling the house turn the utilities on (I don't think it's too much to ask)
I agree Bienes, not too much to ask. If they refuse without a sufficient explanation to you, I would be suspect. Sincet hey own it, they have the abiliity to turn on utilities and if they don't, they are obviously hiding something.
You have two options, pass or figure absolute worst case on your rehab budget and make offer accordingly.
Is this common in a wholesale deal? Not by my book!
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
14y
This "scheme" (note, I didn't say scam) sounds strikingly familiar. "Wholesaler" markets property and claims they "own" it. But they really don't... not legally at least. They operate with a "hold" period and allow you to do your due diligence. They can't turn utilities on because they have not recorded the deed (they don't legally own the property.)
Bienes, do you have have insight into the recent legal history of the property? Current legal owner, how the deed was last transferred (SWD, truatee deed, etc), deed history, etc? Is this an "E.H." promoted property by chance?
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
14y
Originally posted by Chris Martin:
This "scheme" (note, I didn't say scam) sounds strikingly familiar. "Wholesaler" markets property and claims they "own" it. But they really don't... not legally at least. They operate with a "hold" period and allow you to do your due diligence. They can't turn utilities on because they have not recorded the deed (they don't legally own the property.)
Bienes, do you have have insight into the recent legal history of the property? Current legal owner, how the deed was last transferred (SWD, truatee deed, etc), deed history, etc? Is this an "E.H." promoted property by chance?
Chris, I don't want to give out specific names on a public forum, but it was sold to a buyer by an LLC as special warranty deed at the top of the bubble in 2006, and then quit claimed into a trust by that buyer a year later. It still has the Trust as the owner on the appraiser's website. I don't know who E.H. is--it's another group of people.
As I said I did buy one another house through this group (a normal wholesale deal) and it went smoothly. But I didn't like the terms of the current deal considering how much work the house needed and my own lack of experience at quantifying how much a major rehab would cost.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
14y
Thanks Bienes. This is different than what is in the link I posted above. I suspect, but obviously don't know, that they don't turn the electric on because the power has been off for a long time. To get power back on for Progress Energy (and other utilities) requires a meter base inspection from the local inspection department and requires identifying a licensed electrician on their form. While not that much, they could end up spending a few hunderd dollars...
So I agree with Will and Carlos. You are reduced to what the property preservation companies face. Lug out a generator to test electrical and an air compressor to test the plumbing. Not ideal... but if it were me, I would insist that the price be adjusted accordingly.
Sidebar: EH == EconoHomes. I'm not advertising, am not affiliated in any way, and have not bought from them. Their name wasn't used in the other post I referenced becase (as we concluded later) the OP was avoiding using the name to retain her marketing fee.
Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
14y
Originally posted by Chris Martin:
Thanks Bienes. This is different than what is in the link I posted above. I suspect, but obviously don't know, that they don't turn the electric on because the power has been off for a long time. To get power back on for Progress Energy (and other utilities) requires a meter base inspection from the local inspection department and requires identifying a licensed electrician on their form. While not that much, they could end up spending a few hunderd dollars...
So I agree with Will and Carlos. You are reduced to what the property preservation companies face. Lug out a generator to test electrical and an air compressor to test the plumbing. Not ideal... but if it were me, I would insist that the price be adjusted accordingly.
Sidebar: EH == EconoHomes. I'm not advertising, am not affiliated in any way, and have not bought from them. Their name wasn't used in the other post I referenced becase (as we concluded later) the OP was avoiding using the name to retain her marketing fee.
I looked at that link you posted Chris--this isn't anything as complicated as that. That is interesting about the power being off for a long time--that may well be what happened in this case.
Professional · Fredericksburg, VA · Member since 2015 · 37 posts · 8 votes
11y
Good afternoon All,
I really wanted to chime in because I am in a similar situation. Most of the homes I encounter here through REO or wholesale and don't have the utilities. The banks really don't care and will not connect power (as is) means as is with them. They won't connect for every "tire-kicker" that may be interested. Not sure how to resolve these going forward other than to inspect well and have enough budget to handle problems that may arise. Any ideas or input?