Property Inspection as a Negotiation Tool

All properties you are considering purchasing should be inspected if you are a professional investor and be sure to have your buyer's briefcase ready with all forms you will need. You should have a “subject to inspection approval” clause in all your dealings. You never know what's under the roof.



To get a feel for the property, and perhaps initiate the negotiation process, you may, however, decide to use some informal inspection techniques. To complete this exercise you will need some general knowledge, pen and paper, a clipboard, flashlight, marble and an inquiring approach. 1. Roof – Prior to entering the home stop outside and examine the roof. Look for traces the roof may be damaged (shingles curling up at the edges, dry rot, under curling, etc.). Three to five years of life remaining on the roof is recommended and preferably less than 3 layers of shingles.



2. Ceiling – Once inside the property examine the ceiling with your flashlight. Look for stains, water damage, and fresh paint on the ceiling.



3. Cabinets – Check the cabinets and look under the sink.



4. Windows and Garage Door – Make sure all windows and the garage door open and shut properly.



5. Marble – Use a marble to test whether a property is level. You can put a marble on a flat floor surface or counter to substantiate the levelness of the property.



6. Inspection Report – Once the inspection has been completed use the report to re-negotiate the purchase price.



As a general rule, look in every corner and cabinet in the property. All blemishes and problems must be documented. You will use them to justify your discount. You might even supply a repair cost estimate and attach it to your purchase offer.



All your offers must have an inspection clause. For example “Subject to partner’s inspection and approval.” There are a number of reasons you should conduct an inspection. Always specify a time frame for the inspection (i.e. “10 business days from acceptance of seller”).



1. Most new investors don’t know what to look for when evaluating a property for problems and concerns. A good cleanup and paint job can hide a lot of damage. Possible termite damage, water leakage and infestations could be hidden under the roof. Plumbing can be old and outdated. Electrical systems may be fire hazards. How do you know? By learning how to inspect a property or get professional help if necessary!



2. Estimate the cost of repairs for the damaged areas upon completion of the inspection report. Determine whether this report will affect your decision to purchase the property. You may want to pass on the property if the damage or your concerns are expensive to repair. A badly damaged property can be difficult to turn for a profit. On the other hand, if the damage is small you can use the report to re-negotiate a lower purchase price for the property.



Simply review the problems with the owner and ask the owner to pay

the expenses to repair the property. Since the repair will take time

and effort, the property owner will most likely opt to drop the asking

price for the property.



Take notes of the area if you find a blemish.



You might even pause when looking at a wall, ceiling, under the sink, in the crawl space, etc and on occasion look twice. You do not need to say anything if you look at an area very intensely. The homeowner will say "We will fix that" or “Oh, we fixed that.”



When I inspect a home, I inspect to negotiate! I take a lot of notes and use a lot of sounds like "hmmm".



I like to go over my inspection report (I use a vary professional looking report) with my customer and let them know I would be happy to take care of all the repairs if we are able to work something out.



Inspecting a property is not rocket science once you know how too!