Inspections on short sale properties?

Question

Those of you that purchase and retail a lot of short sales, do you have the property inspected?  If so at what point during the negotiations?  I'd hate to pay an inspector and the deal fall through.

One other point.  Do you have a clause in your option contract that sets a date for which the homeowner must vacate the property?

James Ward · Answer

Caleb,

You have a few choices when it comes to inspections:

1) Pay to have it inspected. (Some inspectors will cut you a deal if you use them on a regular basis.)
2) Have contractor inspect. (Most will want to be compensated in some form or another.)
3) Let end Buyer inspect. (Always ask to see report.)
4) Learn to perform inspections for yourself. (This one is real tricky, but the option is there.)
5) Take your chances.  (This will come back to bite you at some point!)

Caleb Whitney · Answer

Explain the contractor thing.  If I have a contractor go out to give me an estimate of repairs isn't he going to expect to do the work? I can't imagine that he is going to want to do too many of these with compensation.

Sam Ally · Answer

Subject to inspection & approval

Subject to appraisal acceptable to Buyer

In event of buyer default, deposit is sole remedy/ are the clauses I utilize.

In addition, I use (standard) line "Seller understands and agrees to vacate property immediately upon sale, or will be subject to per diem charges as listed herein" which is inserted in the letter of understanding and the contract.  I agree with Justin, as most sellers vacated prior to sale.   As for the inspection, I have never paid either. My contractors provide me with enough ammunition to negotiate prior to initiating the short sale which is certainly something you should be doing.  End buyer conducts their own inspection.

Justin S. · Answer

Your end buyer will do an inspection.  If anything comes up, ask for a copy of the inspection report and use that to negotiate a further price reduction.  I have never paid for an inspection on a short sale flip.

I never tell the homeowner they need to vacate.  I do tell them that there is not guarantee I can delay the auction and its best if they start looking for a new place.  If I can get it delayed they are more than welcome to stay as long as they do not mind potential buyers walking through.  Most will vacate on their own.  If they stay, I do make it clear they need to vacate before we close, but I've never had an issue with anyone staying beyond the auction date.