Just like contractors, it is always a good idea to get multiple home inspectors to quote a rate for a home inspection. And not using a home inspector may be the most expensive four or five hundred bucks one ever saves.
We liken those who do not have their homes inspected to those who never go to the doctor while suffering from ailing health. "Well, it might be my diet." Ok, Doctor Feelgood, good to see that those high school shop classes included a full medical degree. What the...
At any rate, there are a few ways that this can go down for someone buying a property to rehab. One way involves property picked up from MLS. In this scenario, we always write our offers SUBJECT TO INSPECTION. Usually the buyer is accepting our offer due to wanting a fast closing and cash. So, we try to get the inspection done within the first couple of business days of being under the contract. (Another reason to become familiar with multiple home inspectors.)
A second scenario is when a property is picked up at auction. Sometimes an auction will have enough time on the clock to land a walk-through. Other times, it may be a neighborhood visit only. Sometimes neither. If we are the winning bidders, we still schedule an inspection almost immediately after being notified of our win. This is where having a good Realtor comes in handy. We line this up through him or her and never deal directly with the inspector.
A third scenario is a wholesaler will call with a home to sell. Okay, now it comes down to negotiation. Meet the price, but contingent upon inspection. No inspection, but a lower price. There are a thousand ways to play that game. However, even if we buy without the inspection we will still schedule an inspection for after the close.
Why? Why inspect?
In all three scenarios, the inspection report is usually the bare minimum that needs to be completed in order to sell. But not always. We once flipped a home with shingles that were reported as in need of immediate replacement. We left them on and still sold the home for more than the asking price. However, usually, one has to belly up to the bar and get the basics done before he or she can do anything else. So, for $400 to $500 (prices may vary in other areas) one gets a scope of minimum work to complete. Sounds like a bargain to us.
Also, in the auction scenario, the auction house is going to charge a registration fee of $2,500 or more. This fee is lost if one walks away from the agreement. (Read the auction policy and procedure information carefully -every auction company is slightly different.) Walking away at $2,500 may be the more prudent action if the inspection reveals something of epic proportions and the project is a loser. We chalk this up to the cost of doing business.
Avoiding inspections can and will cost multiple of thousands of dollars. Our best advice is to ALWAYS insist on an inspection. And, again, get multiple bids. It is easy to be lazy, but it is also expensive. Knowing the rates and reputations of multiple home inspectors in one's area gives the upper hand in crunch time. This is a way to make money. We heard a story on one of the Podcasts that we listen to of a guy who got two bids on roofing. The bids came in at approximately $500 apart. The guy then called a third roofer and the bid was multiple thousands lower. He found out later that the two biggest roofing companies in his town are owned by the same family. Laziness could have cost him big time. Inspectors will not be thousands of dollars different, but they may be leagues apart when it comes to giving a comprehensive report. Also, like all people, inspectors may be on vacation, or unable to attend a party at 123 Any Street when summoned.
Don't be lazy. Be smart and better off.
Thanks for reading. Please feel free to comment on these posts. We welcome your input.
Please check out our main site: WWW.BOXBEND.COM
This site is for informational purposes only. We do not guarantee anyone's performance in the house flipping, or transformation, or investment arena of real estate. Invest in your own ideas and projects at your own risk.