Should Wholesalers Inspect Properties Before Flipping?
Is it worth getting a home inspection if you are wholesaling houses? Many don’t. Yet, there could be far more profit it in than you think. Here’s why, and how much difference it could make to you…
The Pros & Cons of Virtual Wholesaling
Virtual wholesaling or ‘real estate day trading’ has become much more popular in the past few years. This is essentially just finding and flipping houses online. Often out of area and sight unseen. That has worked well for some. Especially in a speculative and fast growing market. Though if you track ads for properties on Craigslist, you may find some have been stuck with them for a year or more.
Un-inspected, sight unseen deals can be a goldmine. They can also be highly risky and become dead weight on your books if you own them. Or damage your reputation if you keep backing out of contracts.
The Value of Personal Inspections
Even if you aren’t a professional home inspector or contractor, there is value in getting out in person to see what you are really buying.
It can reveal a lot about location and views, as well as property condition. Many things can still go unnoticed using Google and listing photos. Big things like the electric not being updated, or the fact there is only the front of a house and nothing else.
The Advantage of Professional Home Inspections
Hiring a professional local home inspector can add a lot more value than you think. It may even be more efficient than going yourself. Especially as most of the big and expensive repairs may not be seen by your eye on the surface. This includes items like plumbing, electric, roofs, mold, foundations, etc.
You may not intend to fix any of these items as a wholesaler. Yet, it can make all the difference in how fast you can flip them for, and for how much.
First of all, this is about certainty and de-risking the investment for end buyers. There is nothing that kills a sale or investment like uncertainty. That’s true for any consumer and business item. It’s the unknown that breaks you. Without knowing the real situation, any smart end buyer will have to price in the worst case scenario. That is a complete rebuild or teardown. They may still buy that, but at least they know what they are getting into.
Compare that with having an inspection and knowing the private well, electric, foundation, roof and AC are okay. Even if the rest of the house is a complete gut rehab, that can instantly add $50,000 or more in real value. Even if one of these things is an issue, the end buyer can comfortably offer a lot more. You’ll also be able to make the property appeal to a far larger buyer pool.
Imagine two listings side by side. Both distressed looking properties. One is a complete mystery. The other has a home inspection report that shows most of the mechanicals and structural items are good. Both are priced the same. Which do you buy?
That could easily make a home inspection the best ROI of anything you can do.
If it’s not possible to inspect, then you may be able to get your own remote teammate out with a camera, along with a contractor. Or ask if the seller has a recent inspection report they can provide.
