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Tags: Advantage, Bank Foreclosures, Control, Credit Report, Facing Foreclosure, Failure, Foreclosure Property, Great Potential, Important Things, Investing Basics, Lost, Making Money, Many People, Mortgage, Nbsp, Niche, Real Estate Investor, Real Estate Investors
I asked a friend recently what he thought of having home inspections done on residential investment property. “They suck,” he said rather vehemently. When I asked him why he had such an emotional reaction, he shrugged his shoulders and mumbled something about inspections being a big waste of time and money because they “never find anything wrong anyway.” I suspect my friend either isn’t buying enough houses, or he hired the wrong inspector.
My Home Inspector finds things wrong with every house he inspects, and that’s just the way I want it. Costing between $200 and $450 each, I think home inspections are one of the single best bargains for a real estate investor. In fact, usually the inspection pays for itself, and I’ll tell you why in just a minute. First, let me just say that if my inspector ever tells me a house has no problems, I will send him back to do the job right. Here’s why.
What Should Be Inspected
All my offers on houses (except bank foreclosures- I’ll explain that in a minute, too) are subject to an inspection by a professional Home Inspector. I’ll say it again. ALL my offers. Why? Two reasons.
First, even though I’m a pretty handy guy and I’ve bought and sold a lot of houses, I’m no expert in structures or engineering- not even close. My Home Inspector is. There are a lot of things that could be wrong with any home I purchase, no matter how good it looks or how new it is. Nasty things like cracks where there should be no cracks, leaks or water damage in spots that should be dry, heating systems that throw only cold air, and… well, you get the idea. My inspector, expert that he is, knows how to find these things, and his job is to tell me about them.
Second, because I make so many offers, I just don’t have time to inspect a home like I should. Putting a home inspection clause in my offers is like my safety valve. I don’t have to worry because my inspector will do what I don’t have time to do. As we already discussed, he’s much better qualified anyway.
O.K., I promised I would tell you the reason I don’t put this clause in my offers on bank foreclosures. Here’s why- it would weaken my offer to the bank. Banks give preference to true, non-contingent offers and I want them to know that I’m prepared to close no matter what. Will I have an inspection done on these foreclosure homes? You better believe I will- but I won’t make my offer subject to the inspection. The results of the inspection will be for my own information and edification only.
I have all my residential investments inspected, and I recommend you do the same.
Another Tool In Your Bag
There is one more very important reason to have a home inspection done. When you sign a purchase offer, and it is accepted by the seller, the negotiation process is not over- not by a long shot. In the seller’s mind it might be over, but in my mind it’s really just beginning.
When your inspector finds something wrong- trust me, he will- you have another tool in your bag of negotiating tactics. Now is the time to go back to the seller, explain the findings of the inspector, and ask for one of two things- either repairs of the problem areas, or credit off the selling price. Either one is good, but personally I like the money better. Here’s an example.
Recently, I had a home inspection done on a 1724 square foot ranch in a nice section of town. The home inspection actually turned up very little, but a couple of things my inspector did catch were a faulty damper in the chimney flue and a bad GFI circuit interrupter in one of the bathrooms. Not necessarily major repairs, but I am going to incur some cost to repair them. They also represent a powerful negotiating tool. What did I do?
I phoned my Realtor and explained the inspector’s findings. Then, I instructed my Realtor to ask for $750 credit off the price of the home to cover the repairs. Will I get it? Not bloody likely, but I will get something, and that’s the whole point. Whatever I am able to negotiate, (in this case it wound up being $350) it’s more than I would have gotten if I had decided to forego the inspection. Also, I wouldn’t have found out about the needed repairs until much later- maybe not until I sold the house and my buyer’s home inspection turned them up. Not good.
But, since I did know, I was able to renegotiate for $350, which was $130 more than the inspection cost me. I told you most of them pay for themselves! Very good.
Who To Hire
I have written another article, Building Your Team, about how to find and hire competent professionals to help you in your Real Estate business. I’ll share a few additional comments here on that.
First, look for someone with the right credentials. Members of the American Society of Home Inspectors (ASHI) are certified to conduct home inspections, and licensed engineers are licensed by your state. Either or both of those qualifications are very desirable.
Second, look for experience. If they just hung their shingle last week, they are probably not experienced enough to handle the job. My guy has been inspecting homes for 23 years, and was a contractor before that. In fact many highly qualified inspectors are semi-retired contractors.
Finally, ask other investors and Realtors for referrals. They will know who the trustworthy inspectors are in your town. Once you find someone you trust and enjoy working with, stick with them. The hassle of switching is not worth saving a few bucks, which is all we’re really taking about anyway.
Consider well what I’ve said in this article. I think you’ll agree that getting a home inspection is one of the best things you can spend your money on when investing in residential property.
Now, go make more offers!
Tom Dunn is a successful real estate investor and author of the popular DealFiles Real Estate Investor Stories free newsletter. You are welcome to share this report, unedited and in it’s entirety, with anyone you like. You may not remove this text.? 2006 by Tom Dunn. Website: http://www.dealfiles.com e-mail: tom@dealfiles.com
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Tags: Bank Foreclosures, Bargains, Cold Air, Cracks, Emotional Reaction, Handy Guy, Heating Systems, Home Inspection, Home Inspections, Inspection Clause, Leaks, Nasty Things, Professional Home Inspector, Real Estate Investor, Residential Investment Property, Safety Valve, Shoulders, Time And Money, Waste Of Time, Water Damage
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Real Estate Investing For Newbies - Intro To Foreclosure Basics
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| Submitted By: Chris Parks |
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By now of course you know foreclosures are at an all-time high in our country. Nevertheless it is another Real Estate Investing niche that has given many people great potential for making money.
One of the most important things to remember about foreclosure investing is that there are many details to consider. It is not difficult, per se, and once you become familiar with all of the small details you can achieve success in no time at all.
The first thing you need to know about foreclosure investing is how it works.
Basically, a foreclosure is a property that the bank owns due to the fact that the owner of the property neglected to follow the terms and conditions of his/her mortgage, which usually means a failure pay his or her mortgage. In turn, the bank that owns these properties is forced to sell them back to the public in order to recover the money that they lost.
And to go along with this, the bank often attempts to sell foreclosures quickly because they are not making any money by holding onto them. All of this works out to the advantage of a foreclosure investor.
Because homeowners have heard or read about the profit potential, most people facing foreclosure will usually try every option available before selling to a Real Estate Investor. Let’s face it, they know that as Real Estate Investors we are only going to offer a certain percentage of what the property is worth on the open market, but look at the alternative.
The home will be auctioned off. The homeowner will get nothing in terms of money, will lose all of their equity in the house, and have a foreclosure on their credit report. This will probably prevent the homeowner from being able to qualify for another loan for several years.
Depending on the situation the Real Estate Investor, in exchange for control of the property may offer the homeowner a cash payment, make up the missed mortgage payments, and pay all of the penalties and legal costs that have accumulated. In essence the property is brought to a current status and the foreclosure process is effectively stopped.
Real Estate Investors have really helped homeowners in this situation whether they realize and appreciate it or not.
So our job is to find homeowners who are facing foreclosure and either pass on or work the lead to see if we can buy the property. The main thing that makes the foreclosure process very complicated is that it varies from state to state.
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Tags: Advantage, Bank Foreclosures, Control, Credit Report, Facing Foreclosure, Failure, Foreclosure Property, Great Potential, Important Things, Investing Basics, Lost, Making Money, Many People, Mortgage, Nbsp, Niche, Real Estate Investor, Real Estate Investors
I asked a friend recently what he thought of having home inspections done on residential investment property. “They suck,” he said rather vehemently. When I asked him why he had such an emotional reaction, he shrugged his shoulders and mumbled something about inspections being a big waste of time and money because they “never find anything wrong anyway.” I suspect my friend either isn’t buying enough houses, or he hired the wrong inspector.
My Home Inspector finds things wrong with every house he inspects, and that’s just the way I want it. Costing between $200 and $450 each, I think home inspections are one of the single best bargains for a real estate investor. In fact, usually the inspection pays for itself, and I’ll tell you why in just a minute. First, let me just say that if my inspector ever tells me a house has no problems, I will send him back to do the job right. Here’s why.
What Should Be Inspected
All my offers on houses (except bank foreclosures- I’ll explain that in a minute, too) are subject to an inspection by a professional Home Inspector. I’ll say it again. ALL my offers. Why? Two reasons.
First, even though I’m a pretty handy guy and I’ve bought and sold a lot of houses, I’m no expert in structures or engineering- not even close. My Home Inspector is. There are a lot of things that could be wrong with any home I purchase, no matter how good it looks or how new it is. Nasty things like cracks where there should be no cracks, leaks or water damage in spots that should be dry, heating systems that throw only cold air, and… well, you get the idea. My inspector, expert that he is, knows how to find these things, and his job is to tell me about them.
Second, because I make so many offers, I just don’t have time to inspect a home like I should. Putting a home inspection clause in my offers is like my safety valve. I don’t have to worry because my inspector will do what I don’t have time to do. As we already discussed, he’s much better qualified anyway.
O.K., I promised I would tell you the reason I don’t put this clause in my offers on bank foreclosures. Here’s why- it would weaken my offer to the bank. Banks give preference to true, non-contingent offers and I want them to know that I’m prepared to close no matter what. Will I have an inspection done on these foreclosure homes? You better believe I will- but I won’t make my offer subject to the inspection. The results of the inspection will be for my own information and edification only.
I have all my residential investments inspected, and I recommend you do the same.
Another Tool In Your Bag
There is one more very important reason to have a home inspection done. When you sign a purchase offer, and it is accepted by the seller, the negotiation process is not over- not by a long shot. In the seller’s mind it might be over, but in my mind it’s really just beginning.
When your inspector finds something wrong- trust me, he will- you have another tool in your bag of negotiating tactics. Now is the time to go back to the seller, explain the findings of the inspector, and ask for one of two things- either repairs of the problem areas, or credit off the selling price. Either one is good, but personally I like the money better. Here’s an example.
Recently, I had a home inspection done on a 1724 square foot ranch in a nice section of town. The home inspection actually turned up very little, but a couple of things my inspector did catch were a faulty damper in the chimney flue and a bad GFI circuit interrupter in one of the bathrooms. Not necessarily major repairs, but I am going to incur some cost to repair them. They also represent a powerful negotiating tool. What did I do?
I phoned my Realtor and explained the inspector’s findings. Then, I instructed my Realtor to ask for $750 credit off the price of the home to cover the repairs. Will I get it? Not bloody likely, but I will get something, and that’s the whole point. Whatever I am able to negotiate, (in this case it wound up being $350) it’s more than I would have gotten if I had decided to forego the inspection. Also, I wouldn’t have found out about the needed repairs until much later- maybe not until I sold the house and my buyer’s home inspection turned them up. Not good.
But, since I did know, I was able to renegotiate for $350, which was $130 more than the inspection cost me. I told you most of them pay for themselves! Very good.
Who To Hire
I have written another article, Building Your Team, about how to find and hire competent professionals to help you in your Real Estate business. I’ll share a few additional comments here on that.
First, look for someone with the right credentials. Members of the American Society of Home Inspectors (ASHI) are certified to conduct home inspections, and licensed engineers are licensed by your state. Either or both of those qualifications are very desirable.
Second, look for experience. If they just hung their shingle last week, they are probably not experienced enough to handle the job. My guy has been inspecting homes for 23 years, and was a contractor before that. In fact many highly qualified inspectors are semi-retired contractors.
Finally, ask other investors and Realtors for referrals. They will know who the trustworthy inspectors are in your town. Once you find someone you trust and enjoy working with, stick with them. The hassle of switching is not worth saving a few bucks, which is all we’re really taking about anyway.
Consider well what I’ve said in this article. I think you’ll agree that getting a home inspection is one of the best things you can spend your money on when investing in residential property.
Now, go make more offers!
Tom Dunn is a successful real estate investor and author of the popular DealFiles Real Estate Investor Stories free newsletter. You are welcome to share this report, unedited and in it’s entirety, with anyone you like. You may not remove this text.? 2006 by Tom Dunn. Website: http://www.dealfiles.com e-mail: tom@dealfiles.com
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Tags: Bank Foreclosures, Bargains, Cold Air, Cracks, Emotional Reaction, Handy Guy, Heating Systems, Home Inspection, Home Inspections, Inspection Clause, Leaks, Nasty Things, Professional Home Inspector, Real Estate Investor, Residential Investment Property, Safety Valve, Shoulders, Time And Money, Waste Of Time, Water Damage
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