Aside from an inspection what else should I do for due diligence?

12 Replies

I would just recomend your pricing info is crystal clear. Make sure you understand what the price should be and what similar houses are selling/renting for. I would not overpay 1 penny in this market. DOM for rentals/sales. Do you have a solid PM?

@Tiwana Merritt Walk the property (or have a property manager walk the property and facetime you in), if there are rehab items needing to be done get a quote for the amount (not a 'ballpark estimate'), validate your pricing (rent and/or resale and ARV - depending on your strategy) with a realtor, and if there's any mention of termites get a termite specialist to the house.

@Blake Choisnet I have an inspection on Monday so I’ll see what he says. I already did a virtual walk through with the agent. It looked pretty good from what I could tell. Also solid brick home, pretty standard 1960’s model with the 3 bedrooms, 1 bath. The most thing I’m concerned with as the shape of the roof. There is potential to add another bathroom and he kitchen could use some updating. But the price is just under 60K and about right for the area. Even got to speak to the owners. They were house proud and only moving because it’s now too small to fit their family of 4 after 11 years of ownership. I have a good feeling about the place but also want to be smart and invest wisely. Thanks for your help!

You could talk to the home inspector about the neighbor hood or the appraiser. Type in a google search of the city and neighborhood. Look for all of the basics through this website - check rentometer rates, look on zillow or redfin about sold properties similar to the one you are looking at within the same neighborhood. Go to the cities website and see what their plans are for economic growth and their budget for last year to see what has been upgraded or is scheduled for upgrades. Become a hermit for the next week and search as much as you can. LOL. 

Hey I basically want to know if I have to wait until the closing date to state that I am no longer interested in purchasing the home because the inspection was not satisfactory. An initial inspection was carried out which showed many areas that needed repairing, replacement and overall attention. We both agreed to an amendment of the contract based on the sellers willingness to carry out the needed repairs. The home was reinspected before the closing date but was still not satisfactory. When I inquired about pulling out of the contract due to the failed inspection I was told that technically the seller has until the closing date to meet the terms of the amended contract. Is this true? It is now 2 days from closing and the home has not been reinspected and as far as I know from the inspector no inspection has been requested. I found out that the seller wants to try to keep my earnest money and get me to back out of the deal. What should I do?

@Tiwana Merritt If you didn't put a deadline on your repairs addendum and it just says "prior to closing" I would suspect you would be right, they could complete the repairs just before closing and it would be fine. If your contract says you as a buyer have a right to a final walk through inspection prior to closing, you could do that and then if it's not satisfactory push back the closing until they do all the agreed upon repairs. It sounds like you want out of the contract even if they do the repairs though? Unfortunately if you already requested renegotiation of the contract for the sellers to do repairs and you both agreed to the items that need repairs, if they do repair the items you probably don't have much recourse for getting out of the contract and getting all your earnest money back, unless there's another contingency still (financing, etc) you can use to your advantage. 

Fortunately, at least where I am, for earnest money to be released to either party, both buyers and sellers have to agree and sign the release. So, typically the worst you can get is splitting it half and half since that is sometimes the only thing both sides will agree to if they both think they are right. 

I'm a bit late on the initial question, but to me this is due diligence.

1. Run comps and analyze the area. If you're buying a property in need of significant repairs compare sold properties in your condition, and rehabbed. Also look at other factors like days on market, available inventory, ETC.

2. Analyze condition of the property, get repair costs for any major items, budget for small touch ups / cleaning as well.

Some people take it farther but I would avoid going into what's called "analysis paralysis". If you can check things out in person yourself that is a big help too, but for you being out of state just have a trusted team.

@Stone Saathoff thanks! The comps are good and it’s a good deal. I do think I’m suffering from ‘cold feet’ and it’s complex with Covid and me out of the country. Even to get the docs notarized is a challenge and I’m not even sure if I will be able to get them to the States once they are signed! It’s all just sounding too hard but I guess worth fighting for if I want the long term gains...

Yes check the verbiage of the contract. Also, do you have a real estate attorney? If so, they should really be answering all your contractual questions. Also wondering if you want out of the deal regardless if seller makes repairs, or are you just concerned bc it appears they haven't made them yet?