How to Get the Most Value From Your Home Inspection

Jul 22, 2013 by

PeopleOnce an offer on a property is accepted, most buyers hire a professional home inspector to assess the condition of the home. The inspector will write a detailed report for the buyer to use in deciding how to proceed with the purchase. Should the buyer cancel the contract and terminate the purchase; ask for the seller to complete repairs; or request a price reduction or purchase credit from the seller to cover repairs?

Unfortunately, many buyers fail to realize the importance of the home inspection. Keeping the factors below in mind can help ensure that you get the most value from the process.

Attend the inspection

Many buyers let their real estate agent handle the process and don’t even attend the inspection. This is a huge mistake. Most real estate sales professionals are going to do a great job for you, but if you rely on them to handle this process alone, then you aren’t going to hear the inspector point out any issues that might cause you to think again about whether it is the right property for you.

Check the inspector’s credentials

In many states an inspector doesn’t need any formal inspection education and may not have to be licensed or bonded. In order to make sure your inspector is a competent professional, you should do a little research on your state’s requirements, certifications and professional designations. Then question, and verify, the experience and knowledge of your inspector. If you don’t, you might get a really bad inspection report that fails to find important issues.

Inspect the home for yourself

Most of the time a home inspection is only the second or third time a buyer has walked through the property — and probably the first time with a few hours to really look around. This is the most expensive purchase you will ever make. Doesn’t it make sense to do many detailed reviews of the property before you make the final decision to proceed forward with your purchase? Bring a friend or family member along for an additional set of eyes. If you discover something that makes you second guess whether it is the right property for you, you’ll be glad you found it before you closed escrow.

Make a list of costs

At the home inspection, separately from the inspector, you should add up all the costs of items you want to repair, replace, paint, improve, landscape, etc. Adding up all those costs, plus getting bids and estimates to make those repairs and upgrades, will give you a better feel for how much you will be spending on the property once you take ownership.

Negotiate repairs

With your inspection report in hand — plus your list of needed improvements and the assistance of your real estate sales professional — you can request that the seller make repairs. The seller may say no, give you a purchase credit or repair some items. But the more detailed your list, the better the chances the seller will at least give a little — and maybe a lot.

read more

Related Posts

Tags

Share This

How to Make a Better Real Estate Investment

Jul 15, 2013 by

Investing in real estate has lots of risks that can derail even the best-looking deals, so you need to make sure you are addressing the known perils and doing the hard work to diminish the chances that something will go astray with your purchase. And here’s the most important part: You must start before making the purchase and continue during ownership.

Financial sense

When you buy real estate, you must make sure that it’s a smart financial decision. Rentals make sense if they are cash-flow positive and provide a fair rate of return on the invested equity. Investors should not purchase negative cash flow properties, period. If you pencil out your rate of return on a negative cash flow property, you’d probably realize it would have been better to invest your money elsewhere in an asset with better returns.

Buy a property in good shape

Skip the fixer-uppers: They almost always cost way too much to repair. Many a buyer has theorized that it would be fun and profitable to buy a property, fix it up and sell it at a profit. Rarely does this scenario come true — usually the buyer ends up losing money. This may work for a construction contractor who is experienced in estimating the costs of repair, but for the Average Joe, chances are you will lose your money.

Secure long-term financing

Make sure to take out long-term fixed interest rate financing. It costs significant amounts of money every time you finance or refinance a property, so try to do just one financing at purchase and enjoy the peace of mind knowing you won’t have to worry about interest rate changes in the future. Go long!

Review your title documents

All buyers should review the title insurance policy, schedule of exclusions, title abstract and a plat or survey of the property. Schedule an hour for your title insurance agent to go through all those items with you, in detail, so you can address any issues before you purchase. Significant issues are rare, but you have to address them before you close escrow.

Property and liability insurance

Make sure to keep the proper insurance in place and for an appropriate amount, as needed for the specific property and your specific circumstances. You should sit down with your insurance agent and discuss your complete financial and insurance picture so that if something does happen — such as a fire, dog bite, flood or slip-and-fall — your insurance company will work with you to reduce the chances it would significantly impact your finances.

Manage rentals well

If your property is a rental, make sure to secure good tenants and keep them for as long as possible. Treat them well, keep your property in good shape, address issues and resolve them quickly. You’ll make the most money with the least hassle by treating your tenants the way you’d like to be treated.

So, if you want to make a better real estate investment, the areas above are good places to start. You’re reducing the likelihood of property issues occurring that could cause you financial pain or take up an inordinate amount of your time. And if you talk to long-term investors — and you should do that, too, to pick their brains — they’ll probably have many “I learned that lesson” stories to share. It’s better to learn these lessons from other investors than to learn them the hard way during your property ownership.

read more

Related Posts

Tags

Share This