Fix/Flip Inspection Contingency?

Question

Is it typical for a flip deal to have the deal contingent on a favorable home inspection to protect the flipper?

Bill J Fay · Answer

You certainly can include an inspection contingency but like any transaction, the sellers will want to accept the best offer. For an ‘As Is’ deal, especially in a competitive market, you’ll have other investors that will bring in an offer with no inspection or appraisal contingencies with a quick close. Lean on your agent to asses what offer will get accepted.

Matthew Williamson · Answer

Total newbie here, but @Jared Anderson isn't this commonly referred to as an "option" period? Like a 7, 10, or 14-day option period that you pay a small, non-refundable fee for (usually like $100 for SFH in my experience) when you submit the contract. And with that option period you get all inspections taken care of and you can back out of the contract for any reason as long as it's within that window of time. Even if the inspections come back great you can still exit the contract. I've heard of 30 and 90 day option period windows too. Some people make a bunch of offers at once, get a bunch of houses under contract, and use the option period to dwindle their list to only the options they want to buy or can afford, and exit the contract on the rest of them. All you will lose is your option fee. Again, a total newbie here who only has experience buying long term SFH for my primary residence.

Michael Dumler · Answer

@Jared Anderson, generally speaking, yes. However, it still entirely depends on the remaining terms of the contract (intended purchase price, EM deposit, appraisal contingency, closing timeline, other stipulations, etc.).

Jared Anderson · Answer

@Michael Dumler If time allows in a slower market and the property they are dealing with looks a bit more rough, is it typical for a flipper to have a home inspected before going under contract?

Matthew Crivelli · Answer

I always tell my borrower's to add as many contingencies as they want to protect yourself. As long as the seller agrees, there is no downside for you as the buyer. @Jared Anderson

Michael Dumler · Answer

@Jared Anderson, yes, the whole point of including an inspection contingency is allowing the buyer to back out within due diligence if the inspection report looks rough. That being said, depending on how competitive your market is many successful flippers will perform their due diligence before going under contract. If they feel confident in their numbers and scope of work, they will waive their inspection contingency to make their offer more appealing to the seller.

Fix/Flip Inspection Contingency?

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