Enthusiasm is great. Blind enthusiasm loses money. Before you assign a contract or send a deal to your buyers, check for these common red flags.
Pricing Red Flags
The spread is too thin. If the difference between the asking price and ARV doesn’t leave room for repair costs, your assignment fee, and the buyer’s profit, it’s not a deal — it’s a trap. The 70% rule exists for a reason.
ARV seems inflated. When the listed ARV is significantly higher than comparable sales support, the sender is either inexperienced or intentionally misleading. Always verify with your own comp analysis.
No repair estimate provided. If the deal sheet says “light rehab” without a dollar figure, be cautious. “Light rehab” means different things to different people. A property that needs $15K in cosmetic updates is very different from one that needs $60K in structural work.
Property Red Flags
Foundation or structural issues. These are expensive and unpredictable. A cracked foundation can turn a $20K rehab into a $70K rehab. Most fix-and-flip buyers avoid properties with structural problems unless the price reflects the risk.
Environmental concerns. Older properties may have asbestos, lead paint, or underground storage tanks. Environmental remediation is costly and can delay timelines significantly.
Title issues. Liens, judgments, unpaid taxes, or unclear ownership chains can kill a transaction. Always recommend a title search before committing.
Zoning restrictions. A property that looks like a great multi-family conversion might be zoned single-family only. Verify zoning before assuming a use case.
Seller Red Flags
Seller won’t provide access. If you can’t inspect the property, you can’t estimate repairs. Buyers who bid sight-unseen are taking on enormous risk.
Unrealistic timeline. A seller who needs to close in 48 hours is either desperate (which might be fine) or hiding something (which isn’t). Urgency alone isn’t a red flag, but urgency combined with resistance to due diligence is.
Multiple wholesalers marketing the same property. If you see the same address from three different sources with different asking prices, the deal chain might be too long. Each assignment adds cost and complexity.
Using AI to Flag Risk
Automated deal analysis can identify some of these red flags at the extraction stage. When AI processes a deal email, it can flag:
- Spreads that don’t meet minimum thresholds
- Missing data fields (no repair estimate, no ARV, no square footage)
- Sentiment indicators suggesting urgency or pressure tactics
- Duplicate properties across multiple sources
This doesn’t replace due diligence, but it surfaces potential issues early so you can prioritize your investigation effort.