Are you self-sabotaging your business by providing too little information to prospects when you wholesale homes, or are you draining your profit potential?
How detailed do real estate investors need to be when preparing information or marketing and presentation packages for potential end-buyers when selling homes wholesale?
Wholesale home sales is a very simple concept; buy cheap – sell cheap. It is actually one of the easiest, most direct and low risk ways to make quick money in real estate. However, there are some sticking points that catch many off guard and cause a lot of confusion, and even more debate. One of these that new wholesalers often overlook at first is the amount of information and detail they will provide when presenting the opportunity to potential buyers.
So is a simple email with the basic numbers enough, or should you invest and compile a heavyweight package full of details, due diligence, and projections based on all possible scenarios?
Some investors and buy and hold rehabbers love to complain about wholesalers on online forums and give them a hard time for making so much money with less effort. Some of them rant zealously with no intention of ever giving away any of their business, while others just want to spend more time and expense on the wholesaler. Therefore, his comments should be taken with a grain of salt.
A wholesaler recently submitted their list of supplied items including:
A close inspection of the house of 45 pages
repair estimate
ยท Independent review
Title search and link information
Tax Information
Analysis of all maintenance costs, including utilities.
Information on additional resale services after property rehab
Most would consider this an exaggeration. It may definitely look good and complete, it exudes credibility and diligence, but you’re certainly duplicating work and adding an extreme amount of time and cost to every deal.
Keep in mind that most end-buyers are going to do all of their own due diligence. They don’t trust the wholesalers and unfortunately in many cases they have been proven right in not doing so. So why throw away money that the end buyer isn’t really going to use and just pay again? consuming millions and thousands in potential earnings?
An estimate of repairs and a reasonable basis for estimating ARV (after repair value) are normally expected. Of course, many about how detailed they think repair estimates should be. For the sake of repeat business, consider that under-promising and over-delivering value is probably best practice. Whatever your reason for going, remember that accuracy is key and you won’t be forgiven for hiding big repair costs.
Of course, at the other end of the scale, many have had incredible success providing a simple one sheet listing and property data form, or even less.
So find the right balance to meet and exceed expectations without waste, and keep adjusting as the market demands.