Estimating repair costs

[Jeff Warner]

I'm sure this topic has been covered before somewhere on this forum so I apologize if I have missed it.

I'm just curious to see how experienced Wholesalers estimate repair costs? I understand that ultimately it would be up to my buyer to have his own inspection done, I would just like some tips on estimating costs to help with negotiating for a better price.

Is this a waste of time or should I have a basic inspection done?

[Account Closed]

Hey, Jeff and Cheray, I’d stick with guessing!

The fact is there are countless variables which can sway repair costs from one extreme to another. At every aspect of the process, from personal expertise, cash purchases vs. financing, financing rates and holding costs, efficiency and cost of labor, the quality of materials used, what you repair vs. what you replace … the cost of repairs will always vary from one buyer to the next. The buyer is ultimately accountable for repair estimates and costs, not the wholesaler.

Unfortunately, there’s no way out of it; we HAVE to provide repair estimates. “How much in repairs?†will always be one of your first questions. What you can do until estimating becomes second nature is start Googling wholesale properties and look for listings with itemized repair costs. You can make a ballpark estimate which should be sufficient. I always include a disclaimer with my estimates, such as, “For rental quality rehab: My repair estimate is just that, an estimate. You, the Buyer, will ultimately determine your own costs. Bring your contractor.â€

Inspections are simply impractical. Some will tell you to provide for and speculate on your buyers closing costs and any fees or expenses incurred by the seller to purchase the property, renovate the property, hold the property or sell the property. They tell you to factor in repair estimates supported by three licensed contractor bids, scope of work and breakdowns of material and labor costs, financing costs, holding costs, property tax, insurance, utilities, lawn care or snow removal, baby-sitting, coddling, pacifying or any other unforeseen provisions required to provide complete immunity to your powerless and unwitting buyer from personal responsibility.

The numbers you disclose on your marketing material should be limited to price, ARV, supporting comparables and a “rough†repair estimate. That’s it. There is absolutely no good reason to assume your buyer’s responsibility in analyzing the deal any further.