Imagine this: You find a perfect wholesale deal—a rundown house in a hot neighborhood, priced way below market value. You lock it up with a contract, assign it to a cash buyer, and boom: You pocket $10k. Easy money, right?
Until…

The buyer discovers a $20k lien on the property.
The city slaps you with code violation fines the seller never mentioned.
Turns out, the “seller” wasn’t the real owner.

Suddenly, your
10k profit turns into a 30k legal nightmare.
This is why due diligence isn’t just a fancy term—it’s your lifeline as a wholesaler. Skip it, and you’re gambling with your business.
In this guide, you’ll learn:

How to spot hidden risks (liens, bad titles, code violations) in minutes.
Red flags in a property’s condition (even if you’re not a contractor).
Free tools to automate due diligence and save time.

Let’s dive in before you lose your shirt.

What Is Due Diligence in Real Estate Wholesaling?

Due diligence means doing your homework on a property before you put it under contract. It’s how you answer:

Is the seller legally allowed to sell this house?
Does the property have hidden debts (liens) or violations?
What repairs are needed, and how much will they cost?

Skipping this step is like buying a used car without checking the engine. You might get lucky… but probably not.

5 Due Diligence Steps Every Wholesaler Must Take

1. Check for Liens, Code Violations, and Title Issues

Liens are debts attached to a property (e.g., unpaid taxes, contractor bills). If you buy a house with liens, you could inherit the debt.

How to check:

Use TitleTap or PropStream to run a quick title search (costs 10−50).
Visit the county recorder’s office (free but slow).

Code violations (like illegal additions or unsafe structures) can kill a deal. Check with the local building department or use BuildFax for a report.

Red flag: If the seller says, “Don’t worry about the title—it’s clean!” Always verify yourself.

2. Verify the Seller Actually Owns the Property

Shockingly, some “sellers” don’t own the home they’re trying to sell. Scammers often target wholesalers with fake deeds or inherited properties.

How to verify ownership:

Cross-check the seller’s name with the name on the property deed (use the county assessor’s website).
Ask for a driver’s license or government ID.

Pro tip: If the seller is a family member handling an estate, ask for probate court documents.

3. Look for Red Flags in the Property’s Condition

You don’t need to be a contractor to spot major issues. Here’s what to watch for:

Foundation cracks: Look for uneven floors or gaps around doors/windows.
Water damage: Stains on ceilings/walls, moldy smells.
Old wiring: Flickering lights, outdated fuse boxes.

Don’t skip the walkthrough! Bring a contractor buddy or use apps like Inspectify to document issues.

4. Estimate Repair Costs (Even If You’re Clueless About Construction)

Wholesalers often underestimate repairs, scaring off cash buyers. Here’s how to ballpark costs:

Use HomeWyse or RepairPricer for free repair estimates.
Text photos of the property to 3 local contractors for rough bids.

Example:

Roof replacement: 8k−15k
Kitchen remodel: 10k−25k

Red flag: If the seller says, “It just needs a little paint,” assume they’re hiding bigger issues.

5. Use Tools to Speed Up Due Diligence

Manual due diligence takes hours. These tools do the heavy lifting for you:

PropStream: Pull title reports, comps, and owner info in seconds.
DealMachine: Inspect properties and estimate repairs on the go.

Real-Life Horror Stories (Learn From These Mistakes)

Story 1: The Invisible Lien

A wholesaler in Texas skipped the title search and assigned a 100k deal. Later, the buyer found a 25k IRS lien from the previous owner.
The wholesaler had to refund the buyer’s deposit and pay legal fees.

Lesson: Always. Check. For. Liens.

Story 2: The Fake Seller

A new wholesaler in Florida bought a “deal” from someone posing as the owner. Turns out, the real owner was in jail—and the contract was worthless.

Lesson: Verify ownership like your business depends on it (because it does).

How to Avoid Due Diligence Burnout

Due diligence doesn’t have to take days. Here’s how to streamline it:

Create a checklist (things that must be checked while searching for a property/deal
Automate searches with PropStream or BatchLeads.
Build a team: Partner with a title company or contractor for quick answers.

Final Takeaway

Skipping due diligence is the fastest way to go from “hotshot wholesaler” to “broke and sued.” But if you follow these steps, you’ll protect your deals, your reputation, and your bank account.

Liked This Guide? Share it with your wholesaling crew, and drop a comment with your biggest due diligence challenge!

Why Skipping Due Diligence Will Bankrupt Your Wholesaling Business