10/13/2022
I recently saw a post about the importance of being ready for your appraisal, but here is my reply about inspections. Lots to think about.
Don't forget to get ready for your inspection as well. We are seeing an increase in inspections, and as a Certified Master Inspector, I can tell you we see a lot that are simple things to correct... however once they get on the report, some sellers read small things and see big issues that may not be there.
Since this is an investor group, let me elaborate on something we are seeing more of. We work with people on rehabs and flips. We do a report as soon as the utilities are on, and before the rehab. This does two things; first it gives you a list of things to be sure are included in the rehab, and second it documents the before conditions. Then at the end of the rehab we go back and modify the report to document the repairs. Once again, there are two benefits. First is that if you use a contractor, it is a check to insure they addressed those issues (usually before final pay is issued). Second, is that our clients say they increase the selling price by about $10k. Buyers eat up, having before and after documentation from someone neutral.
Choose us, or whatever inspector you prefer. Use them on a regular basis, and tell them you want a discount. Please read the following the way it is intended. We would love to be your inspector, but if you choose someone else, use my notes here as an example of some things to ask your inspector if you use another one.
We try to keep pricing so that you can sell the report to the potential buyer. Most of our clients get the inspection fee back from the buyer at close. We do a scaled back "investor inspection" for most rehab/flips. One thing to think about with negotiating with an inspector is access. I work a little cheaper for investors not just because we do a limited scope specific for investors, but also because we usually have a time frame and a lock box. That gives me flexibility in my schedule, and lets me work more efficiently.
As you choose your inspector, we of course would like to do it for you... however, there are good inspectors out there. Be sure to ask some questions. Reputation is important, and integrity is the cornerstone of my business. It should be for your inspector. I have investors from all over the world that I work with on a regular basis, so if they become your buyer my reputation is already there. If they are new to me, I talk to them, explain the process, and if needed offer them some emails for references.
Credentials can be important. Make sure they are certified by someone. I carry my Certified Master Inspector certification, and also a commercial inspector certification. One huge thing that investors like is that I am also one of only 5 people that can do the City of Independence Rental Ready safety inspections. It speaks to my ability, instills confidence in my being neutral, and saves some money in Independence since I can include it in the final inspection fee.
Another thing you want to know is how long they have been doing inspections, and do they have a background in investment properties. Let's be honest. The vanity you put in your house is probably not the same one you would put in an investment property. You want to make sure that the inspector knows what is important to investors, and things to watch for that can mean liability issues. You also want to make sure they understand that old doesn't mean bad. I have seen 30-year-old furnaces that I would happily use in my house, but I have seen 5-year-old furnaces that were toast... Investors know that you don't spend money you don't need to, spend money that protects your investment, and an inspector needs to know the difference.
A last thought that you might not think about is the personality of the inspector. One of the places we really shine is talking to buyers. It is important that you have an inspector that understands what is big to one buyer may not be big to someone else. Your inspector needs to leave preconceived notions about cost or things like that at home, and jus stick to the facts. Make sure they can instill confidence when talking to buyers, but also that they don't create undo fear or talk in so much geekspeak that buyers are overwhelmed.
