My offer was just accepted on my first FSBO purchase, which I intend to flip. So far I have had two general contractors give estimates on the rehab cost and all of them agree about the extent of the work needed (total rehab, including new roof, kitchen and bathroom) and on the soundness of the property's foundation, which is good. Given the opinion of two independent contractors and the extent of the work, does it makes sense to pay for an inspection? Can anyone see the benefit of hiring a professional inspector in this situation?
You left too many unknowns. How old is the home? Any additions, or remodels already done? If so were they permitted ?
Your contractors are most likely looking at the project differently than a GOOD property inspector will.
It sounds like you have limited experience with renovating, if that is the case I would lean toward getting the Home inspection. I am not suggesting your contractors are dishonest. I have been a contractor since the early 90s, and have done more than a few renovations, but I would, and often do, still have home inspections when I purchase. But, that said, I have been accused of being overly cautious on occasion.
Hope it turns out well for you. Have a Merry Christmas !
The property was built in 1925, has no additions, and hasn't undergone any major remodels since 1988. Thanks for the comment, and well wishes.
Steven my opinion is if your asking if you should get an inspection than you probably should. It sounds like you have been in the home a few times and still have some concerns. You can usually hire an inspector to give you a verbal inspection report for about half the cost. This way you know for sure what your getting into. With a home that old I would have done it when I was newer. I still do home inspections on properties that are not cut and dry.
As someone who has gone through the same debate (whether to get a formal inspection or not), go get one. The $600-$800 fee is worth the ease of mind, imo.
But make sure you get a highly recommendation inspector. I have seen so many examples of poorly written, inadequate inspection reports that were useless to the buyer.
To this day only trust & use one guy (30 years experience) who is also licensed by our local utility companies to inspect electrical, plumbing (gas lines) etc before their employees turn on the respective utilities. Find someone like that & you will get a very detailed, but sobering inspection.
Thanks for all of the helpful recommendations.
The thing I'm now wondering is whether it is best practice (as a full-time flipper) to always get a property professionally inspected as a general rule, regardless of the condition of the property and the quality of contractor? Just to be clear, this question is not because I'm trying to save money or cut corners; instead, I'm trying to build a successful flipping business and incorporate the best practices early on.
Another thing I don't understand is what additional value an inspector adds if your general contractor, who also looks at the property, is very experienced? I'm sure that there must be some value, but I'm not sure what it is.
Any thoughts will be helpful.
I think it is largely dependent on the contractor. There are definitely some sleazy ones out there and I'll paint a worse-case scenario.
Say a contractor wants your business so he intentionally overlooks something that you aren't aware of. He knows it will be a problem that needs addressed, but he hides it and then gives you a low-ball offer on your project so that you'll hire his crew. Once hired, he raises these problems to you mid-project and gouges you on the repairs.
I'm not saying it is likely, but it is a scenario where a contractor could really screw you.
@Alex Huang Yes I agree, it highly depends on the contractor. I should mention that I've been working with my two contractors for several years and we have built trustful relationships. With that said, it's good to know some of the worse-case scenarios.
During the proposal to buy I use the detailed inspection report to negotiate a better price. One of the best was a $20k reduction on a divorce sale because the 1830's home was in need of a lot of repairs. The agent was not pleased as the reported deficiences now become a disclosure issue. We eventually had to do those repairs but we could do most ourselves. After 7 years of steady rentals we sold it to a fellow investor (who was aware of all the work we did) for a very healthy profit & hold the note @ 12%.
On several others it helped knowing what we were into before we make the final offer. I'm past climbing onto roofs & into attics to find issues like bathrooms vented into the attic & the resultant mold accumulation. A fellow investor decided to buy without an inspection only to discover a slew of code violations that were revealed after they got permits & had started an expensive rehab. They lost $25k on that one.