ScaredyCatGuide to Real Estate Investing – Part IX – The Home Inspection

scaredycatguide (73)in #scaredycatguide • 8 years ago

You submitted an offer on a property and it was accepted.

Sweet!!! - Now what?

Inspection

As we spoke about in the last post. The inspection contingency is an integral part of the sales contract. Now that you have one in force - need to setup that property inspection.

The inspection will help discover any “surprises” that may be lurking within the property. Trust me, surprises equal money as they usually come in the form of needed repairs so the inspection is important.

Most agents will schedule one for you as they have existing relationships with inspection companies. However, that doesn’t mean their contact is the best company of the best value so don’t be afraid to shop around.

Regardless of who sets up the inspection, we need to make sure of the following items:

Timing of inspection:

Generally we have a 7 day window for our inspection period. You will need to have an appointment before that window expires. Do not wait till day 7 either - based on what the inspector finds you want time to formulate a plan yourself or with your agent to bring to the seller.

For example – let’s say the HVAC system is 15 years old. Well, that is near the end of the life expectancy. In a case like that we can negotiate the seller purchase a third party warranty on the system so it’s covered the next two years thus mitigating that cost if it were to fail in the near term.

Another example – and this was from personal experience – the water shutoff valves at the walls for the toilets in both bathrooms did not function. My inspector gave an estimate of the cost to have them replaced by a plumber. We then asked for that concession as part of closing on the property.

The estimate was for $300 - so basically my inspector just paid for himself.

Also, there is the possibility of major issue that may lead us to walk away from the deal altogether. Let’s say the roof has multiple small leaks.

In a situation like this you can:

Walk away from the deal as per your right with the inspection contingency
Receive a closing credit for the amount to repair/replace the roof
Or have the seller agree to fix the roof before closing on the property

Cost of Inspection

Price will vary somewhat depending on what state you live in and how many services you order.

Generally I pay $325 in South Florida for a 38 page inspection report that includes the roof.

They basically check everything. If an electrical outlet doesn’t work, it’ll be in the report.

Also, I get an estimate on useful life of the roof along with condition, which is the most important item in my opinion since it’s the largest expenditure when it comes to property upkeep.

Inspectors will also offer additional items such as:
• Radon
• Lead/Radon VOCs-in-Well Water
• Well Water Quality
• Wood Destroying Organisms (WDO)/Termites
• Mold Sampling/Air or Surface Mold Sampling (Where Qualified)
• Septic Inspection
• Swimming Pool and Spa Inspection
• Asbestos and Lead Detection

You may or may not need these depending on the property type and area. I don’t know of anyone that has gotten Radon gas checked.

However, if you are buying a wood frame home, especially in South Florida, than a termite inspection is absolutely in order. Last thing we want to do is buy a house being held together by termites!

Items like mold inspection are situation specific. If a home looks like it has or has had some mold then you may want to get that area spot checked to get an all clear. Buyer beware when it comes to mold.

And there you have it…