Know When to Walk Away From That “Great” Real Estate Deal
It seems like a no-brainer – when a great real estate deal comes along, you take it. However, while a too-good-to-be-true deal can be a very seductive thing, it is really best to sit back, take stock of the situation and decide carefully. Walking away from a property that is an incredible bargain may be the right thing to do for a number of reasons.
It doesn’t fit in with your long-term goals
To be successful as a wholesaler, it is important to set long term goals and make all of your decisions based on whether they support those goals or not. If you find a great deal, but it will knock you too far off course, whether because it will set you too far back financially, it is too far out of your comfort zone or scope of knowledge, or it doesn’t fit in with your area of focus, it may not be worth it.
You can’t make the numbers work
Even a great deal won’t work if you cannot fit it in to your specific budget. If the home requires capital you don’t have for repairs, if you won’t have enough money for a decent cushion for unexpected problems
It is more work than it is worth
You might decide to defray the cost of a purchase by doing repair work yourself, or even by taking on some other responsibilities of the overall process of acquisition and sales. However, your time is money. The more time you invest in this one property, the more opportunities you will miss, and the less time you will have to focus on other deals that may be even better than this one.
You have not considered all the angles
It is a great deal, but why? Has it been on the market for months? Is it over-improved for the neighborhood? Is something wrong with it that can’t be fixed, like its location? Does it have hidden problems? If so, it could be more trouble than it’s worth to try to eke out a profit.
The market for the home is too specific
It is one thing to buy a property that fits into your carefully cultivated niche. It is another to buy a property that’s so specific to a certain type of buyer that it may sit on the market for months before you can find the right person. The idea of wholesaling is that finding homes that suit clients you already have for a fast turnaround. Even if a property seems like a great deal, if you don’t have a buyer already in mind, you run the risk of having carrying costs eat into any profits you might have made.