Why People Aren’t Buying Your Wholesale Deals
Have wholesale real estate deals you are still trying to move? Why aren’t the buyers biting?
Finding deals is only half the equation in real estate. You’ve got to be able to resell in order to really turn those opportunities into cash. While wholesaling has grown in popularity, many are struggling to move properties for longer periods. That can mean losing contracts, being stuck with deadweight that ties up vital capital and killing your income. What can investors do about it?
Here are five common reasons people aren’t buying wholesale properties now, and how investors can change that…
Unknown Repair Factors
There is still a lot of inventory out there, and investors are crushed on time to evaluate all of their options. If your property is just a big question mark in terms of repair costs and issues, it can be easier just to skip onto the next deal. Most of the time they are thinking worst case scenario. So, don’t be afraid of scaring them off with the details. They just need to know so they can make an offer. Cosmetics are one thing, but how are is the plumbing, electrical and roof? How urgent are any code violations against the property?
It’s Too Expensive
Are you really offering wholesale pricing? It is important to look at this in terms of percentages and dollars. It should be competitive versus the ARV so that investors can line up appropriate loans. So know your lending market. It should also leave enough dollars to be attractive. A 30% discount on a $50,000 property is really nothing once your end buyer pays closing costs and even does basic cosmetic improvements like flooring.
It’s Too Cheap
Savvy real estate investors know that there are still houses trading out there for under $10,000. Others are going to be very suspicious of anything inder $100,000. That doesn’t mean you need to bump up the price, but justify it. Show them why the deal is so good. Maybe you just need to flip fast, that’s the going rate for local REOs and the neighborhood, or you have built in room for a new roof replacement.
No Trusted Relationship
Simply trying to blast out your wholesale house ads on Craigslist to strangers can soak up a lot of time. It means always trying to connect with new people, build a new relationship, and develop that. Ideally wholesalers will make these connections once, and then just be able to present great fitting inventory to their list who trusts them and who just buy. Focus more on nurturing the list than just flashing your inventory to strangers.
They Know How Much You Paid
One of the biggest hurdles today is that buyers can instantly see what properties sold for online. If you bought it for $40,000 less 60 days ago, they are probably going to think you should get half that (or less). Use double closings with transactional funding instead of buying and then going to market the deal, and avoid this challenge.
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