Another Hard Lesson Learned - Have your Rehab Inspected BEFORE You List it
When my business partner insisted on a house inspection prior to paying our contractor I must admit I thought it was a waste of $250. After all, the property was rehabbed and any problems should have been fixed. The buyer's lender will require an inspection - I mean how many times does a freshly rehabbed house need to be inspected? What a waste of money, right? WRONG!
I am wrong...so wrong. I'll admit it. Since I've been doing this solo, I kept my stance and let the initial inspection come from the buyer. The first house went into escrow with a really nice offer, they performed the inspection and to everyone's surprise, they noted termites. The buyer, not knowing how to deal with this news showed the report to the lender, and the lender refused to loan on the property. I handed the inspection report to my contractor and he fixed everything on the list. I had the property treated for termites and now it's back on the market. Two-three weeks into this process the house looks like there's something wrong with it because its been on the market so long. I'm lucky to get any showings on it.
The second property went into escrow and that inspection found significant repairs needed. I handed the inspection report to my Contractor and he fixed everything on the list - no charge. However the buyer still got scared and backed out of the deal. Dang it!
That convinced to do a little math. What is the cost to have the property off market for 7-21 days, even though the buyer pays for an inspection, if it results in killing the deal? It costs plenty. Am I willing to take that chance in the future? No. $250 is inexpensive comfort to avoid surprises.
I've changed my posture - I'm doing a home inspection after every rehab from now on!
I am wrong...so wrong. I'll admit it. Since I've been doing this solo, I kept my stance and let the initial inspection come from the buyer. The first house went into escrow with a really nice offer, they performed the inspection and to everyone's surprise, they noted termites. The buyer, not knowing how to deal with this news showed the report to the lender, and the lender refused to loan on the property. I handed the inspection report to my contractor and he fixed everything on the list. I had the property treated for termites and now it's back on the market. Two-three weeks into this process the house looks like there's something wrong with it because its been on the market so long. I'm lucky to get any showings on it.
The second property went into escrow and that inspection found significant repairs needed. I handed the inspection report to my Contractor and he fixed everything on the list - no charge. However the buyer still got scared and backed out of the deal. Dang it!
That convinced to do a little math. What is the cost to have the property off market for 7-21 days, even though the buyer pays for an inspection, if it results in killing the deal? It costs plenty. Am I willing to take that chance in the future? No. $250 is inexpensive comfort to avoid surprises.
I've changed my posture - I'm doing a home inspection after every rehab from now on!
Comments (2)
I think the area was in the midst of swarming - I discovered it on 2 more houses at the time. And ask my contractor how HE missed those repairs. I would have thought he would be on top of it. From now on - a little up front expense and don't pay the contractor his final payment until all items are repaired!
Jean Norton, almost 13 years ago
How did you not see the significant repairs or the termites? Are you local or are you not on-site?
Jeffrey K., almost 13 years ago