@Allyson Edwards
As Dylan said, yes, I would go higher on agent fees. At this price, you may be able to get it down to 5% or 5.5%. As a former(?) agent myself and investor, I've seen plenty of agents avoid listings with low commission and FSBO, so you may be able to do a 3%/2% split in favor of the buyer's agent. If your friend is willing to do a big favor and do like a .5 or 1% fee, add that to a 3% for the buyer's side. Some brokers have minimum fees that they'll allow an agent to take, so your friend may only have so much leeway.
Regarding costs, a full cosmetic redo will easily hit 100-150k for this area. At that price point, people are wanting higher end. Not top of the line, but not Home Depot off the shelf stuff either. If you need anything worked on that's hidden behind walls, floor or ceiling or the roof, it's going to get expensive quite fast. Plus there are also newer regulations about installing fire sprinklers for greater than 50% remodeling. I have no idea what that costs, I've not had to deal with it yet.
Oddly enough, I've found that neighbors have a pretty accurate picture of a house's condition. If they say it's a tear-down, it's probably pretty rough and even if not completely torn-down, you're probably into substantial repairs.
Also depending on the year built, lead paint and/or asbestos abatement will be expensive.
Here are the things I look for when I do a quick walk through deciding if I want to offer on the property. Of course if I get this far, the numbers feel like they may work and this is to confirm or disprove my hunch. If there aren't any major red-flags then I'll proceed to make an offer so I can get more time and really inspect.
As everyone's experience levels are different, you may know all of this or some, others will know all plus a heck of a lot more and someone new might find it useful so I'll just put this out there for all. And if anyone wants to elaborate, I'm always happy to learn more.
Walking up, I look at the general condition of the roof. From the ground, can I see any spots of the mesh showing through on composite roofing. If it's tile, does it look like any don't line up properly, are broken or missing? If I see anything, I budget a new roof and then get it inspected to see if it's a repair or a re-roof. I also check the fascia for any obvious rot or termite damage.
Any obvious issues from the outside? Anything broken, missing, cracks anywhere?
Inside I run some water to make sure there's pressure. I look at the hot water heater. If it looks remotely old, most likely it'll need replacing. I've yet to not have to replace one except in 1 property that the bank put in thinking they were making it livable and able to put it on the market. This was during the 2009 or 10 period as they were realizing they could spend a little money and fix a few things to get a higher price.
Are there any discolorations anywhere on the ceiling from a water leak? If so, I try to get into the attic to see if it looks old or new. If it hasn't been painted over, there may be a greater chance it's on the newer side. Or the prior occupants didn't care at all about painting. I also will glance around for anything that looks off. Termite damage, rodents, and the underlayment of the roof to see the how that looks.
Do doors and windows open and close? Do they stick in a big way? If doors don't close, something may have shifted.
Any cracks in the walls or flooring?
Any dips or slanting of floors?
Any of the 3 above and I get concerned about foundation issues or settling and it's the first inspection I have done.
I also make general notes of what needs redoing so I can estimate out materials and labor.
As I'm going through, I check for plumbing leaks and try light switches. If there's one that doesn't work, I don't get concerned. If there are a few that don't work, I then question what's going on. Usually, breakers tie together a few rooms or fixtures into one run. So if a light doesn't work, I'll check the outlets close by to see if those work.
I'll flip on the HVAC and see if it seems like it's at least kind of working.
I'll find the main electrical panel and take a look. If there are any missing breakers with an open spot that you can see into the box itself, I'd be concerned someone sloppy has been in there and probably unlicensed and I'm worried what else they've been messing with if they're willing to open up the panel.
In the bathrooms, I stand right next to the toilet to feel if there's any sponginess to the floor. If so, the toilet is probably leaking. If it's tiled and any tiles feel loose, that's not good either. Any tiles that are missing or loose near the shower or tub is usually caused by a leak. Vinyl flooring will usually peel up easily near the shower/tub if it's leaking.
I'll try to poke my head in the crawl space if there is one. I check to see the general condition under there. If there are any obvious issues like posts that are unsupported, joists that look not connected or cut, cracks or crumbling in concrete or block walls, anything that looks wet or signs of pests.
I also keep an eye out for what feels like unpermitted additions or covered patios. If the work feels pretty shoddy, it may be unpermitted.
And finally in the back, is there a pool? Is it green or clean? How's the plaster. How's the equipment? Seems pool equipment and AC condensers are some of the first things stolen on a vacant house.
This is all about a 20 minute walk through to just make sure there aren't any red flags that would stop me from making an offer before moving into a proper diligence phase.
I also always budget a contingency for time and money. I do 5-8% if I feel confident about the property and scope of work and lean towards 8-12% if I'm uneasy or there are some unknowns. If there's a green pool that isn't filled, it automatically gets bumped up.
For holding costs, you'll have to include debt service if you're not sure about the financing side. Some money people will allow all deferred, some will want payments, etc. Plus hold money for property taxes plus the dreaded supplemental tax bill that will inevitably show up. Insurance and utilities.
Well, I'm sure I'm missing some stuff. That's the basics for me.
