Wholesaling: Why Isn’t a House Selling?
One thing which continues to cause aspiring investors concern in a housing market that is supposed to be hot is why some properties continue to sit on the market. Is it that the media is spinning positive junk for political reasons, they are getting the statistics wrong or are there unforeseen issues tied to certain properties that investors are overlooking?
Despite the fact that some media outlets are pushing stories of foreclosures dropping there are still hundreds or thousands if not millions of distressed properties out there for the picking. At the same time all reports seem to be pushing incredible momentum in the housing market with tales of properties receiving over 100 offers in days, buyers camping out for weeks to get a shot at making offers and a large percentage of homes going under contract in less than 2 weeks from coast to coast.
So it is normal and perhaps wise to take it as a red flag when analyzing acquisitions for wholesaling a house and seeing some properties sitting on the market for extended periods of time.
Of course all real estate is local. Some markets certainly appear to be back in boom phase, while others lag a little. However, if there are homes selling in your area in days or weeks and some of those you are considering as options for wholesaling a house have been sitting longer you may or may not be right to be concerned.
Here are 5 reasons homes aren’t selling in the current market:
When it comes to wholesaling a house you might not care about looks. In fact you probably know that the ugliest home on the block is often the best deal. However, it’s often the best deal because others aren’t rushing to buy it. If you are wholesaling and you are flipping to another investor for rehab this may not be an issue at all providing the numbers are there. However, some may consider doing some clear out to make the property appear like less work to remodel than it does now.
2. Major Repairs
Major structural repairs are a totally different ball game than cosmetic ones. Again it may not matter to you as a wholesaler if you don’t plan on doing them yourself but an overwhelming majority of other investors won’t touch homes with structural issues at all. They can be impossible if not at least difficult to finance and foundation, roof or septic tank fixes can be incredibly expensive.
3. Rural Properties
Another reason many properties take longer to sell is their location. You might have found some great deals on properties outside the city and the numbers might be there but many will shy away from investing in rural properties due to concerns of jobs to support rents, slower appreciation due to fewer sales and property management hassles.
Perhaps the most common reason for properties not selling of all is being overpriced. Overpriced properties don’t get on the radar of serious investors. This may be a sweet spot for you if you can get a low ball offer accepted, which may be more likely if the home has been sitting on the market.
Perhaps the properties you have been looking at have just been poorly marketed. Perhaps they haven’t received the visibility they should have, may be the photos don’t do it justice, they haven’t been put in front of the right investors or the agent or owner has done a terrible job of follow up and responding to inquiries.
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