Contractor Or Home Inspector
I'm considering buying my first fixer-up. It's a REO property that needs work.
Before I make an offer I want to make sure that I have accurate repair cost. Should I just get estimates for contractors, a home inspector or both?
Contractors will provide free estimates but home inspections cost about $250-300 and my realtor is saying that it's a waste of money.
Find a contractor that is licensed in both areas. They can give you a realistic view without necessarily giving you a full blown home inspection report.
Negociate a fee for his time if you do not use his construction services.
(those that wear both hats are well worth the fees)
Then afterwards dump your real estate agent.
It burns me up when I hear an agent make such ridiculous statement.
They dont have a problem for getting paid 5 - 7% of the selling price (thousands of dollars) for putting
your listing in the MLS and waiting for calls to come in.
Talk about a hypocrit.
They are upset because they would rather an inspector lie through his teeth in order for them to make a sell. It scares them to death to have to get an inspector involved.
I have had numerous tell me to "go easy on the house othewise it wont sell..."
Even it if you do have to pay $250 - $300 fee (which is low and well worth it) just take it out of the real estate agents fee,
at least he is actually WORKING for it.
Good Luck
Go with the contractor....
You're on the right track
Where I live I don't see a lot of cross over between contractors and inspectors, they seem to be one or the other.
If this is a house you have narrowed down from all the others and are serious about trying to purchase it and you don't have the abilities yourself to estimate the rehab or determine all the obvious and hidden defects, then I suggest you:
(1) First get a trusted contractor to go through the house with you. Point out what is obvious to you, then ask him if he sees anything else, put that all in his estimate. Later you can determine exactly what you will fix, what you won't and most importantly to what degree (this is what costs you money)
(2) If you feel confident that the contractor was able to check things pretty well then skip the inspector. As an investor you are supposed to be a professional. Often you are buying houses AS IS, you are going to be looked at by the bank as a more sophisticated buyer than the average homeowner. But if you aren't confident after the contractor, hire an inspector at a reduced rate to come in and look beyond the real obvious stuff, you don't need him to come in and point out minor defects such as a broken cabinet door, you want him to look at the big systems. But keep in mind that because of the nature of the homes you are buying he won't have the ability to be as thourogh as he might in just an average home a homeowner is paying him to look at. Most likely the electricity won't be on or the gas, so he will be pretty limited in what he will actually be able to verfiy. For instance he won't be able to use his sniffer on the furnace to check for leaks. The water won't be on so you may not find out that the previous owner was pissed at the bank for taking his home so he poured concrete down some of the drains and into the toilets and flushed them before he left.
So no matter what you may still be in for some surprises later on. That is why it might be wiser even after you hire every professional you can get your hands on to still make your offer lower by an additional 20% of your rehab estimate in case of additional items come up.
3) Taking this to really cover your ass, you can hire the top level of inspector which would be structural engineer to inspect the house and really be confident that you know what you are buying. Water caused foundation issues will really knock the profit out of your deal in a hurry if you don't budget for them before you make the offer.
It is up to how comfortable you are, in the beginning you have a lot to learn and a lot more to lose. Paying a few hundred dollars out in the beginning if it lets you sleep at night might be worth it.
[ Edited by mfinley919 on Date 10/13/2003 ]
I’d go with the contractor. But…..
Make sure the contractor knows specifically what you want to see from this house. Not just “I want it to sell”. You must articulate exactly what you want to “see” and don’t just put your energy in to telling him, listen to make sure your vision has been grasped. The contractor is best at telling you how and how much to fix it. What to fix comes down to personal preference when it isn’t something “obvious”. When it comes time to fixing the house the last thing you want to hear is “oh but to do that we have to do this and that will cost you extra”. Your goal is to get an accurate estimate, right? Get just that by knowing a bit about what you want. You may find a contractor with some vision but they are few and far between. Would you want to leave that up to someone else anyways?
This is a good post. I too am debating which to use, contractor or inspector.
I would probably go with the contractor just to estimate costs to see if a profit can be made. Then make my offer on the house, and then get an full blown inspection to make sure everything checks out.
am i wrong or not?
Hey
I'm going in that direction. I'll get an estimate from a contractor than the home inspector once I make an offer.
Just keep in mind that when you are trying to buy a home for rehabing, getting a lower price accepted is easier with the least amount of congingences in the offer. It isn't uncommon for a lower offer on the same REO property to be accepted over a higher offer because the lower one was with no contigency clauses in the contract. I never submit an offer with subject to inspection in it on a REO.
I would usually just use my contractors, it all depends. Good luck.
If you do use an inspector, and I just did, I would request what is known as a "Professional Walk Through". As one of the previous posters said, this is where the inspector looks at the main systems and dosen't tell you about broken windows. He won't write up a report, but he'll be very verbal and spend time with you making sure you understand what issues, if any, there are with the house.
I also brought a contractor friend along recently (two heads are better than one).
I would use both at a simultaneous walkthrough if possible. Three sets of eyes are better than two. You will get differing points of view as well. Let them feed off each other.
We use an inspector and a contractor mainly because if you are not paying cash, your lender will require both an inspection and repair estimate; especially a hard money lender. Don't scrimp as this is a part or YOUR due diligence.