The Importance of Real Estate Inspections: Be A Detective when Buying Property

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The other day I went to a listing appointment and gradually asked enough pointed questions and did enough research that I passed on listing the property. Upon first glance the lot seemed simple, but I noticed some odd layout to the side of it that made it unclear where the property lines ran. After doing research I found that the lines were absolutely crazy. This is an old section of town and the agreements through the years with neighbors left the property legally with no ownership to the side of the house and half the front yard.

Límite by Daquella manera

It was the oddest example I’d seen. The property had all kinds of gentlemen agreements about who could use what piece, and the house is owned by someone who’s had it 25 years. I could see someone buying it and all the agreements not known, then the buyer having to face litigation problems in the future if anyone came to claim their piece of the property.

Perhaps the attorneys would discover it doing a title search, perhaps it could be missed because of all the convoluted arrangements. The point is that while doing inspections get a survey done so that you have all the information. Coordinate all inspections, physical inspection of a building’s systems and structure, with inspection of all leases, with title search, with special environment inspections for that area, with a survey. Then do a little snooping.

When problems, or red flags, occur, check them out thoroughly. I was once representing a buyer back when seller’s were responsible for termite inspections before closing. I convinced the buyer to have someone go by and inspect the home on the buyer’s dime to double check. I had received a clearance from the seller that no termite infestation was present and had a letter from the termite company. While the buyer’s inspector was not looking for termites, he did notice signs of infestation. I called the listing agent and the listing agent said that she trusted the termite company and that my guy was not experienced to determine infestation. On my dime, I had another pest control company go out with the buyer’s inspector, and they found infestation – I went over and saw the termites with my own eyes.

Stay alert and be thorough with all inspections and at any sign of trouble go into detective mode and bulldog the problem until you are satisfied you understand the full extent. Too many times people ignore red flags and pay dearly later. We’ve had flooding problems in Savannah, so I started the practice of going around asking neighbors whether water drains or stands in that area – I often get a different response from neighbors, especially if they are renting. Sellers will sometimes fudge and if water has never actually flooded the building they report no flooding problems. However, if you are going to start a restaurant and the parking lot holds water, even though it doesn’t come into the property, then you would probably want to find a higher, drier location.

As stated in a previous post the contract should allow you to easily walk away if the problems mount and the seller is uncooperative, or seems to be hiding information. Be a detective, follow leads thoroughly – hear loud warning sirens at every sign of a problem.

I would also ask that you consider something that seems out of place here, but I feel is very important, the psychological factor. Sometimes we get bogged down in nuts and bolts and miss some obvious parts of every process. One of my first posts here talked about the excitement of investment and how the excitement can cloud judgment. What happens in the inspection process is minimization of problems due to the excitement of finding a “good deal”. You might say – “oh, I can fix that” – or, “that won’t cost much to remedy.” As someone who’s underestimated repairs before, I urge you to overestimate repairs, especially on older properties, because what seems like an easy fix can turn out to be more complicated and costly once you’ve gotten into it. What you thought you could do yourself winds up something that requires an expert’s knowledge and skill, then you wind up spending in the thousands when you estimated in the hundreds. Don’t underestimate the repairs and don’t overestimate your ability to fix them.

It would pay to have an experienced, objective tradesman give you a good estimate, then if you can save money doing some of the repairs yourself, fine, but at least you will have the correct estimate with which to negotiate.

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  1. Mike, I’m all for inspections and disclosures as part of the buying process. However, you don’t walk a property and make an offer that is considered by some to be a “low ball” based on that initial inspection only to beat the owner up with an “inspection report”.
    Agents who encourage that type of behavior should have their commision adjusted the same way they expect the home owner to adjust the price. I, for one, am tried of these so called “buyers agents” who don’t even have a contract with the vultures they (mis) represent.
    For the most part, a Forty Year old house is priced and marketed at the price of a Forty Year old house. Anyone with eyes can see it is going to require more than paint and carpet to make it look like a new house.
    Nice post.

  2. Gregory, I’m talking about a commercial deal with a due diligence clause, and soft negotiation if problems are found — it’s called soft negotiation because you’re sort of speaking softly saying I’d like to go forward and get past this due diligence, but here are a few problems that concern me, can we work it out by X Y or Z.

    It’s smart neogotiation, nothing nefarious.

  3. Gregory Bain on

    Mike, we are going to disagree on this issue. Unless the Property Disclosure was unavailable or lied on about something. Then a deal is a deal. The price was already negotiated.
    Mind you, a structural flaw discovered during inspection is good reason to re- negotiate the price. Same is true if a property owner lies and claims he is unaware of any flooding problems while the inspector uncovers proof of water damage not noticed by the average Joe.
    Once a buyer enters an agreement and the seller accepts the terms the property is dead in the water. The advertising stops and the attempts to secure other buyers for back-up is almost impossible. Residential sales may take the property off the market for 4 weeks and a Commerical deal may be off the market in negotiations for 4 months during this “discovery” clause.
    You know the tactic I’m talking about and how it is used against the property owner. I like that word, nefarious.

  4. True that inspections and surveys are a necesary part of the due diligence in a property purchase. I also disagree with the comment of the negotiating tactics of offering low ball offers. If you are not negotiating, you are losing! There are times for low ball offers and times for full ask offers. Each individual property requires different tactics.

  5. I have bought property like you are describing and have profited just because others had cold feet. If you walk thats ok … there is always someone braver out there!!

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