who does the inspection on a wholesale deal?

It depends on if your planning to keep the property for a rental or assign the home to a new buyer. What type of offer is it? Continued success...........Lubertha

Hi,

Sorry forgot to mention that. It would be assign it to a new buyer.

HI forgot to mention it would be to re-assign it to another buyer. sorry and thanks for your help

Hi Daniel
Since you will be wholesaling you can just kinda figure off the top of your head what it will cost to cosmetically bring the house up to prior.
You will get to where you are pretty good at knowing the costs of materials, paints etc...to fix a house up. Then off the top of your head you can say "it will take my investor $10,000 or $20,000 to fix the house up" and them figure your profit in too....then you can have some kind of an idea as to what you can offer and still make a profit.

Now it is those hidden things that get expensive. Things that cannot be seem on the exterior like water pipes under the house....mold that may be hidden in the rafters...electrical problems etc...
You can go in and make an offer based on what you can physically see is wrong with the place or you can hire yourself someome to do an inspection.
I never hire an inspector on a house I am getting ready to wholesale. I always encourage my end buyer to get an inspector.

Somewhere here on the site I put some forms that you can use for your house inspections. Not exactly sure where but I will search for them.
Sissy

It will depend if you are paying cash or financing the property. If paying cash, you won't need an inspection unless you want one. If you are financing, the lender will require it before closing.
But when you are walking thru the property to write an offer, you will want to assess the property for the rehab that is visible.

Would you not want to have an inspection even if you are going to re-assign it to another person? That way if there are some under lying issues and the end buyer finds out about them from the inspection, will they not want a discount on the property due to the issues? I would think that this would kill the deal.
I think that having an inspection done will also give you more power in the negotiating process in scoring the property under contract.

Let me know your thoughts.

Could someone please shed some light for me please? My last posting on this blog did not get me an answer to my opinion. I would like to know if this would be a good leveraging point in the negotiation of the deal. Please let me know your thoughts as they are all learning points.

Thanks,

Jen

I did have an inspection on the deal I'm wholesaling now, because I was willing to keep it if the buyers didn't want it. Plus I considered it a good learning experience on what to look for. It turns out that the HVAC system needs replacing so I let my buyers know that. But I think that most investors that are buying properties wholesale would like to know if there is anything major going on. If it's just reg. rehab maybe not. Bottom line is they may not do business with you again.

Cathy

Hi

GCs would be your best bet. Just be careful about revealing information about your intentions and/or your business.

This way you can give the new buyer ready proposals from the GCs and if the new owner uses them everybody comes out O.K.

If not you simply used the the GC, however, thats part of the business. I could give you a price on a house in about 15 minutes tops.

Your really not hurting anyone. GCs just chalk it up for experience and include this in the overhead of there business.

Ask the builder

I was wondering the same things, like whether to get the seller to pay for an inspection or to just calculate repairs on just what I see and estimations. But a general contractor sound like the best route, you can think of it as a profesional estimation. Maybe you can build a relationship with a GC and he can do the estimation for nothing if you can assure him work in the future or on that particular property.

Good luck guys on all future venture.

Progression beats any recession!
Calvin

I've pondered over the same question a few of you have mentioned. In light of the responses I just read, would it be a good idea to include a clause in the contract that would make light of the fact that the "repair estimate" included in the offer is not that of a licensed inspector and an inspection by a licensed property inspector is advised or recommended. I think something of this nature would be fare and for warn the new buyer in advance that there may be areas of concern and the need to protect themselves from the unforeseen. As it has been said from other experienced investors---"buyer beware".
lbrown

If you include an inspection contingency in your contract, the end buyer will have the right to do an inspection. I would think this would cover it for everyone. And of course you are going to have a rough idea before you make your offer anyway, using some sort of method, whether it be a contractor or your own knowledge. You would have to have to have an idea of repair costs to know what price to offer to MAKE it a great deal for an end buyer.
Just my thoughts..

Rina

Generally, to get the highest value out of an assignment property, the more information you can pass on the more value you are going to have to the investor. If you pay $150 for an inspection, you can easily pass that cost on in the assignment fee. You will have much more credibility if you have some professional info, whether it is from a GC or a licensed inspector. At the very very least, a comprehensive analysis of what you see can be helpful too, even though you may not have any credentials. Just make sure you disclose what you have and what qualifications are behind the assessments.

The reality is though, at that point, is that the investor will most likely want their own inspection. I have seen too many assessments of property that are flawed due to the alterior motives of the provider. As an investor, I would appreciate any information provided, but I would then pay for and do my own inspection anyway, just to be sure.

I have seen this question come up a few times before so I wanted to bring this back to life. Great information and thank you for it.

Richard
Bothell, WA

It may be the responsibility of the finder, or the end buyer. Obviously, the finder of the deal needs to have enough information about the property to make an appropriate offer. This will be done mainly with a walk through inspection, not usually an official inspection with a professional.

The other factor is that the end use buyer will usually want to have an inspection done by one of their own crew, just to be sure what they are getting into, regardless of wether the finder had done one or not.

Just talk to the end buyer, and see how they would like to handle it. It's usually not that big of a deal. Just make sure that if you cover it as a finder, you get that cost back in your finder's fee.

That was good info, I needed some of those tips myself and wanted to say thanks to all.

Rina hit it right on the head....

"If you include an inspection contingency in your contract, the end buyer will have the right to do an inspection. I would think this would cover it for everyone. And of course you are going to have a rough idea before you make your offer anyway, using some sort of method, whether it be a contractor or your own knowledge. You would have to have to have an idea of repair costs to know what price to offer to MAKE it a great deal for an end buyer.
Just my thoughts..

Rina"

I would have to completely agree with what she said above. You need to get an estimate of the cost of repairs. Wholesaling is all about knowing after repair values and rehab costs, and then knowing the right formula to use in your area to make an offer. The general formula usually is (ARV x .7) - repairs = buyer's price. That means you would deduct your fee after that.

For instance, if a house is worth 100k, and it needs 10k in repairs, in my market I would be able to sell that house to an investor for around 55-60k. So my offer would be around 45-50k if I want to make a decent profit. I then usually put the property under an exclusive option contract or purchase agreement with an inspection period to give myself time to find an end buyer and to allow that buyer to do his own due diligence.

Hope this helps!