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HOME INSPECTION

Before closing on the contract, investor should hire a home inspector to check the house for any need of repairs. House inspection or appraisal cost about $150~400. It might be thought as an expense but it is definitely worth it. Then the inspector prepares a report of list in detail and you can use that as your advantage in negotiating again for the price, if there is unknown repair need comes up. You can either negotiate again for lower price or can ask for repairs on the seller's expense before signing the contract. Otherwise, you have right to cancel on buying the property.

Inspection report should include current problems or future problems it may have due to current condition. Inspectors check safety, electrical, mechanical and structural condition of the house.

Often rehab or foreclosure properties needs a lot of work for owner occupants to move in. When home buyer get a loan for the house, the house will be appraised by an appraisal and the house has to be "average condition" for them to get a loan. Especially FHA/ VA guarantee loans require property to be within their standards. When the deal is made and the buyer is to get financing, if the house appraisal doesn't meet "average condition", they won't lend money to buyer. Then you find out the deal is off and you wasted all this time. Thus, investor may want to get appraisal and fix some things before flipping or selling if house look like it needs a lot of work. If you are selling it to another investor who knows what he's doing, it will be easier to deal with. But if you are selling it to average homeowner who is getting a mortgage, broken window or light fixtures may have to be fixed first to get average appraisal. If the buyer is getting rehab loan with their mortgage, the property can be sold "as is". You can also rehab yourself to make profit. But if you don't want to go through rehabbing or selling to investor then consider making property average condition before making a deal.

 

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