Buying Cash, things to do before submitting serious offer.

4 Replies

When buying a distressed property for cash, what are some things you absolutely want to do prior to making a serious offer? Is the inspection necessary or would you be better off using the money you would give a licensed inspector to your GC to do a solid walk through with you? Is the pre renovation appraisal necessary? What things no kidding need to be done and what can wait until after renovations to either A) sell for profit B) rent for cash flow C) refinance to purchase next property?

@Michael Weis - To get an inspection or not depends on what you are doing to it and how much you trust your GC.  If you are gutting it then you can probably get away without an inspection.  If you are planning on keeping the existing plumbing/electrical/mechanical I would get an inspection to make sure they are in good condition.  

As far as the exit strategy, just remember loan requirements are the same if you are buying it vs refinancing it.  So if you want to keep it make sure you will qualify for the loan now

Brie Schmidt, Real Estate Agent in Illinois (#471.018287) and Wisconsin (#57846-90)

@Michael Weis Just at a high-level, making a cash offer doesn’t mean that (other than a financing contingency) you stop doing any/all other aspects of due diligence. You can still order an appraisal but if you’re confident in your numbers you can pass on that. However, I’d still hire an inspector. If you do have to go back to the buyer and ask for anything it’s easier if a “neutral” appraiser found A, B, and C. If I was a seller it would be tougher to take the opinion of a buyer’s general contractor :)

@Michael Weis A lot of it has to do with the environment in which you are making the offer. If this is an off market deal or something that has been languishing on MLS for ages you can write just about anything you want for contingencies.

However, if this is a hot new MLS listing and you include an inspection period you will likely be blown out of the water by other cash buyers who will take it "as-is" with no inspections.

In cases like this I always run through the property first and do my own quick inspection (bring along someone more qualified than you if you are not comfortable assessing it yourself) and then write my offer with "no inspections" since I've really already done them. I usually check with code enforcement prior to submitting an offer as well just to see what kind of dirt they can dig up for me and to make sure it's legally zoned for whatever my intended use is. 

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