Hi Everyone - a question here. I had an offer accepted on a first income property and just left the inspection/got the report. Needless to say (as I wouldn't be writing this if there were no issues) there were many things found. Some really big and some just minor and cosmetic. Two part question:
1) Is this normal? Do your inspections normally turn up a seemingly huge laundry list of issues - big, small, cosmetic, safety hazards, etc.?
2) What are your strategies for negotiating based on the findings? Price reduction, seller to complete work, etc. One concern on my mind is cash out of pocket. For example, a $15k price drop because the property needs $15k worth of sounds great - but the translation there is that I need to also come up with $15k to have the work done - more $ out of pocket.
Thanks for any and all input, suggestions, negotiation outcomes I may not be aware of, etc.
In this day and age many inspectors get sued for every little thing they don't find. As a result, the inspection reports seem to get longer every year and include a lot more "maybes" and insignificant cosmetic items. You have to separate the wheat from the chaff.
Personally, I would reshuffle the list into items like this:
- Critical (e.g. roof leaks) These will be items of immediate importance to protecting the property or are safety-related
- Important (e.g. Furnace looks old) Pay most attention to expensive items. Obviously it would be important if the front door lock is falling apart, but that is not terribly expensive to fix.
- Cosmetic (e.g. scuffed paint)
I'd pay most attention to the top two categories. Nobody is going to give you another $1K off the price because the paver patio has some uneven bricks, but they might have to cut you a discount if it needs a new roof. If you have concerns on mechanicals dying shortly after purchase, have them get a home warranty. That way if the hot water tank goes, your out-of-pocket is minimal.
Start working on a capital improvement budget to address the other items when they come up.
Thanks @Greg Scott ,
I figured that was the case RE inspectors calling out minuscule things (down to a light bulb out). Appreciate hearing it from you as well.
Also - feeling good about your advice as I had already gone through the summary of items and organized them in just about that fashion.
Appreciate you taking the time to share!
@Greg Scott great advice! There is a lot of peace of mind with a home warranty, and you can even negotiate that the seller cover the cost of that for you!
If I'm dealing with an old hot water tank and HVAC and the seller doesn't want to replace because it's running, I love just asking the seller to pay for my first year of home warranty! It's a good win-win.
@Thomas Stanley I use a more investment focused inspector who doesn't even include cosmetic items! The lists can get super long even then! Doesn't mean you don't have a great deal on your hands.
I'd have them repair the big stuff for you or is this as-is?
I always ask for roof/foundation/plumbing to be addressed. You can also get a bid from a repair company so you know exactly what expenses you're looking at that the seller isn't willing to cover or how much to negotiate down!
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