Wholesale deals - not always - run your comps

[Bill Florence]

While there are lots of good deals out there labeled as "wholesale" offered by FSBO's, wholesalers, investors, agents, brokers, institutions and the like, there are also many deals out there labeled as "wholesale" but priced at retail. I am frequently reminded of this in the wholesale property notifications I receive. For example, I was recently sent a few deals and each one was priced high full retail but marketed as "low wholesale", and they all needed substantial work. They would have been loosing propositions for flip and they would not even positive cash flow per my terms. Sometimes "discount" overpricing is deliberate and sometimes an oversight. I see this a lot especially in hot markets.

The problem is newer or less knowledgeable investors will sometimes purchase these at face value believing they are getting a good deal. Over the years I have looked at countless listed properties where the flip investors went broke and had to walk away from rehab and/or sell at a loss. So the reminder here is do not take anything at face value, due your homework and run lots of comps. Know price trends in your macro and micro markets and if you need assistance, ask a realtor to run detailed comps. In addition to the usual property appraisal items, be sure to look at actives, solds and under contract comps. Just looking at active or sold does not give the whole market picture.