I need some education on on the science of making an offer on a house before having a chance to have a contractor give me an hard estimate. I know in a perfect world I will have time to schedule an appointment with my contractor and have a rehab number before submitting an offer, but I know this is not always the case. Sometimes time is critical. How do you structure an offer without the estimate? Surely it's not a complete crap shoot. I just worry about making an offer, then finding that all the wiring needs replacing, or some other major project that my virgin eyes don't see. Thanks for any help.
Spent 15 years in Army thanks for serving.
Is this a listed property?
I consider it a privilege to serve. Thank you. Yes, it is listed. There are actually 3 I am looking at. I had planned on buying towards the end of may, but one of the listing is a great deal. I want to make a cash offer, but could not get in with a contractor for another 8-10 days. Do
@Alex Flowers I am not in AL but I googled your state RE contract and there is a section on page 5 specifically for inspections contingencies. You can write in any number of days necessary to complete your inspection. Below is the verbiage.
(B) SALE OF PROPERTY CONTINGENT UPON HOME INSPECTION: (This paragraph does not apply to inspections under paragraphs 13 and 14 below.) Buyer requires additional inspection of the Property at Buyer's expense. Within ______ days (7 days if left blank) of the Finalized Date, Buyer shall either personally or through others of Buyer's choosing, inspect or investigate the Property. (1) If such inspections reveal conditions that are unsatisfactory to Buyer, Buyer, at Buyer’s sole discretion, may either (a) terminate this Contract or (b) request that Seller correct the unsatisfactory conditions. Buyer shall exercise either option by written notice delivered to Seller within _____ days (3
days if left blank) after the physical inspection of the Property.
(2) If Buyer requests Seller to correct the specified unsatisfactory conditions, Seller shall respond to Buyer by written notice within _____ days (5 days if left blank) of receipt of such request as to whether Seller is willing to correct the unsatisfactory conditions.
(3) If Seller elects not to correct the unsatisfactory conditions, Buyer shall respond to Seller by written notice delivered to Seller within _____ days (3 days if left blank) of receipt of Seller's refusal to correct such conditions and advise Seller of its election of either (a) to terminate this Contract and recover
the Earnest Money pursuant to Paragraph 3 above, or (b) to waive in writing the request for correction of the conditions and proceed to close the sale.
(4) It shall conclusively be deemed acceptance of the Property, including ordinary wear and tear until the closing, if Buyer fails to notify Seller in writing within the allotted times stated above of any unsatisfactory condition revealed by the inspections, or fails to notify Seller in writing of Buyer's election to
terminate this Contract as herein provided. Further, it shall conclusively be deemed acceptance of Buyer’s request to correct the specified unsatisfactory condition(s) if Seller fails to respond in writing within the time frame stated in subparagraph (2) above.
There is no link I can send but if you google "alabama residential real estate sales contract" it is the first one
That seems to answer it. Do sellers tend to balk at that? The property in question is a forclosure.
@Alex Flowers it is pretty standard in any state. Even for foreclosure or as is properties you still have the right to an inspection. The only time this is not true is sight unseen properties. If these properties are MLS listed you might consider getting a buyers agent. It should not cost you anything and you won't be saving the seller money by going in unrepresented. They are also well versed on the RE contracts. At least for your first one it would be helpful. But you also have us here at BP :)
Hey Alex, it depends how competitive your market is. If this is a hot deal, and you need to be competitive in making offers, then I would say make no, or a minimal inspection contingency.
I second what @Brianna S. said, I would get a buyers agent to represent you.
If you don't have one, go to your local REI club, and find an investor friendly agent. Get there opinion on rehab as well, but remember it is his/her opinion, and they are not usually contractors, but they can tell you what to do (and not do) to the house to get it to sell the quickest.
@Alex Flowers I'll also add, since I don't see it mentioned, that if any of these are HUD properties, you need to know for sure that you want it at the price you offer. Investors do not get their deposit back when they back out of a HUD contract. Only if HUD can't clear a title issue will you get your deposit back. They may or may not renegotiate once you have it under contract. The policy is to deter investors from getting properties under contract and trying to renegotiate without competition (as a strategy) after they find "problems" during the inspection period.
I use contingencies on foreclosure a here and HUD properties. No problems but it is better to be able to estimate when you look before you offer.
Find an agent that knows investment properties.
I think I found a good agent to help me. She is going to look at the property tmrw for me. Her Dad is a builder, and she has worked the investment end a good bit. The property is a foreclosure and has been on the market for about 6 months. It was originally listed at 29k, relisted by another broker at 37k 2 months ago, dropped to 29k 1 month ago, now asking 21k. 3/2 in an area where prices are in the mid 40's to 50's, rents around 850-950. LOOKS like cosmetics in the pics, but who knows.
I think the inspection contingency is pretty standard in Mobile, so far we haven't had any sellers take issue with it. On our last one, we brought the contractor in at the same time as the inspection, and it worked out perfectly.
Thanks for the comment. I submitted three offers today and they all had the 10 day inspection period. I have two more offers going up next week. My agent told me the same thing you did. Any referral for home inspections?
didn't know how to insert your name with the @ in my earlier reply to you.