BiggerPockets

On distressed REO properties, how many of you would recommend to get an inspection done? A friend of mine was telling me it was absolutely necessary because of the chance that there would be faulty wiring and such. I just thought a close walk-through of the house was enough.

I have a number of investors in Texas that utilize me to inspect their homes. Being that I am an investor as well as a inspector, I help my clients by making sure that they know exactly what they are getting into. By giving them detailed information about the subject property, they can better assess whether the numbers will work or not. Most investors that get an inspection find that their projected rehab numbers get adjusted after the inspection is completed. This enables them to determine if it is a go project or not, based on the new rehab numbers that they can now better calculate.
Along with being an inspector and an investor, I am also a real estate broker. Many of my investor clients also have me run comps for them in the area to ensure that their projections for sale prices are as close to being accurate as they can be. Some of them like having me run the comps for them because they know that I can't list the property. I cannot be an inspector and an agent in the same transaction. This helps ensure them that I am giving them real numbers on the comps, and not trying to get a listing out of them.
I would always recommend investors getting an inspection prior to purchasing a house. You would be amazed at some of the things that I have found in houses.

Lee Warren
Licensed Home Inspector #8411
Prospect Inspectors, Inc.

Licensed Real Estate Broker
Property Manager
Prospect Realty, Inc.

[REMOVED]

I don't disagree with the idea of having an inspection. But an inspector is not going to spot every problem. What they tell you is strictly informational. I've never had an inspector who would stand behind the inspection. That is, if they miss something, like the inspector missed a cracked sewer line on the last inspection, its "sorry". He did note quite a number of damaged screens, though.

As far as being licensed, that varies from state to state.

The biggest upside to paying for an inspection is that it gives you a document to use for negotiation with the seller. It would be a rare inspection that didn't uncover enough problems to get the price reduced by at least the cost of the inspection.

Jon, I don't disagree that an inspector can miss something too, but, two sets of eys are better than one set and the cost is so small, why skip it! That is my point and my opinion on the subject.

I've always paid for inspections on every property I've bought. And one I didn't. Yes, he pointed out some issues. But he missed some others. So, I'm not sure its really worth it to continue to plunk down $350 (plus another $250 for "dewinterization") for every house I get an accepted offer on. The more complex stuff, like furnaces, he punted to a furnance guy anyway. Not saying don't do it. I've always done it. I've just become sort of disillusioned.

No-one will do a better job of inspecting your potential property than you (assuming of course that you know what you're doing).

Mike

Maybe this is true in some locations. Not here, and not anywhere I've bought property and had inspections done (CO, TX, CA).

The inspection is purely informational. I just looked at the last one I had done and it says:

All components designated for inspection in the ASHI® Standards of Practice are inspected, except as may be noted in the
"Limitations of Inspection" sections within this report.

It is the goal of the inspection to put a home buyer in a better position to make a buying decision. Not all improvements will
be identified during this inspection. Unexpected repairs should still be anticipated. The inspection should not be considered a guarantee or warranty of any kind.

The inspection provides you information, and might or might not notice significant problems. It provides you absolutely nothing in the way of any recourse if something is missed.

Attorneys go to school for many years, and then have to pass a bar exam. Even a licensed tradesman has to apprentice for some number of years then pass an exam.

In CO, and many other states, there is absolutely no requirement for licensing or experience of any sort to be a home inspector. There are classes available to "help you start your home inspection business". Even Texas, which does require licensing, requires 328 hours of classes. 41 days. For comparison, a 12 credit hour load at a university would be about 180 hours of classroom time, plus additional study time. So, the Texas requirement is fairly significant. Hardly compares with four years of undergraduate school and three more years of law school required to be an attorney.

I'm not saying an inspection is useless. If you know little about houses, it can help you identify problems. But of the inspections I've had done, 90% of the report was either boilerplate or pointing out minor issues like missing doorknobs. And don't expect anything at all from any inspector when (not if) you find something the inspector didn't notice.

I would also say that I've never had a home inspector who was willing to make any comments about termites or any other pest. In places like TX where termites are an issue, a separate termite inspection and certificate was required. That one does actually have something behind it.

Similar for any structural, electrical, plumbing or HVAC problem. At the most, the inspector will make a comment saying "recommend evaluation by a licensed electrician" or whatever's applicable.

If you need an experienced inspector, by all means get the inspection, however if the property is new and they get multiple offers, many of the offers will be 'stronger' if they waive contingentcies (inspection and pay cash). They may take a slightly lower offer with no inspections.

Do you guys think inspection clauses hold any weight on whether you get the contract or not when you make an offer on a REO to the bank?