Why Most Wholesale Deals Suck

Why Most Wholesale Deals Suck


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If you’re an investor who has ever tried to purchase a property from a wholesaler, then you know it isn’t as easy as it sounds. Many new wholesalers lack the experience and the tools to accurately evaluate a deal, much less negotiate well enough to satisfy a savvy investor like yourself! In fact, it’s probably more accurate to say that most wholesale deals…aren’t deals at all!

A sizable majority of these new wholesalers utilize free tools like Zillow’s zestimate to come up with their After Repair Value (ARV). We’ve found in our market (Allegheny & Westmoreland Counties) that zestimates are anywhere between 20 to 30% higher than the actual retail value. Needless to say this is a major issue in our valuation of a property. Without access to the MLS or a comparable appraisal tool, the entire basis for these “deals” is flawed.

Since most of these wholesalers have never actually done a rehab deal, they lack the experience to accurately estimate repair costs. Those costs aside, they don’t even know what needs to be repaired or updated in order to create a competitive and safe home for a retail buyer or tenant. More often than not, the deals they propose will have a comically low estimate for the renovation.

Finally, there is the asking price. Again, since they haven’t done a rehab, they aren’t able to anticipate holding costs, financing costs, closing, taxes, insurance, ETC. Adding the extremely inflated ARV and dangerously conservative repair estimate to the new wholesaler’s inexperienced negotiation skills, and we’re left with a deal that is likely a waste of our time.

Here at Laura Buys Houses, we are rehabbers first and foremost. When our marketing generates a lead, that client is taken through a detailed system and evaluation to find out if we can create a win-win scenario. Only if it makes sense for our numbers and the seller’s situation will we even consider proceeding to a contract.

Over the past few years, we’ve gotten pretty good at our marketing systems and finding great deals on a regular basis. Sometimes, a deal comes along and we are already invested in multiple other projects and unable to give it the attention that it deserves. When this happens, we will consider wholesaling the opportunity to a small, select group of investors.

Because our inventory of these deals, and our time is so limited; we won’t advertise most of these opportunities publically. Instead we have an interview process for potential investor-buyers. This process insures that the opportunities we are offering are a good fit for your business and that we aren’t wasting your time! For those we are working with, we don’t provide deals every week, or even every month. But when we do offer you a property, it will exactly match the criteria for your business. Simply put, the numbers will work by your definition.

If you’d like to interview for our VIP buyer’s list, please click the link or image below and fill out the form on our buyer site. We will contact you within 2 business days to set up your interview!

http://www.laurasellshouses.net/

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