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Old 12-09-2011, 10:23 PM
 
Location: Bike to Surf!
3,080 posts, read 10,331,693 times
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Seems like a no-brainer to me, but I'm a FTB, so what do I know? There must be some reason "it's always been done like this."

How do I know how much to offer on a house if I don't know what's wrong with it? Why would I make an offer FIRST and then do an inspection? The only advantage I see to doing the inspection AFTER making an offer is that you don't waste the inspection money if the seller rejects your offer or takes a better offer.

However, with the market ice-cold as it is where I am, I'm not really worried about a better (or any) offer coming along soon. The property has been vacant for some time and while I've been crawling around it's nooks and crannies a couple of times, I can't tell if that ratty old wiring is energized, or if it's plumbed right, or how bad the basement/foundation is (looks BAD). So, when estimating how much all these repairs are going to cost, seems like nothing but benefit to get the inspection even before pre-approval. No sense in even dinging my credit if I'm not going to make an offer because the foundation is made up of bubble gum and chicken wire. Right? Or am I overlooking something very obvious?

Any suggestions?

Also, any tips on finding a good inspector when you're new to an area? My location seems very wealthy and insular with lots of nepotism evident in a lot of the businesses in the area, and I'm afraid honest talent is going to be hard to come by. What's a good inspector look like?
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Old 12-09-2011, 11:15 PM
 
4,399 posts, read 9,689,541 times
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Quote:
Originally Posted by sponger42 View Post
Seems like a no-brainer to me, but I'm a FTB, so what do I know? There must be some reason "it's always been done like this."

How do I know how much to offer on a house if I don't know what's wrong with it? Why would I make an offer FIRST and then do an inspection? The only advantage I see to doing the inspection AFTER making an offer is that you don't waste the inspection money if the seller rejects your offer or takes a better offer.

However, with the market ice-cold as it is where I am, I'm not really worried about a better (or any) offer coming along soon. The property has been vacant for some time and while I've been crawling around it's nooks and crannies a couple of times, I can't tell if that ratty old wiring is energized, or if it's plumbed right, or how bad the basement/foundation is (looks BAD). So, when estimating how much all these repairs are going to cost, seems like nothing but benefit to get the inspection even before pre-approval. No sense in even dinging my credit if I'm not going to make an offer because the foundation is made up of bubble gum and chicken wire. Right? Or am I overlooking something very obvious?

Any suggestions?

Also, any tips on finding a good inspector when you're new to an area? My location seems very wealthy and insular with lots of nepotism evident in a lot of the businesses in the area, and I'm afraid honest talent is going to be hard to come by. What's a good inspector look like?
People don't "pre-inspect" because what happens when you inspect the house and the seller rejects your offer?(for whatever reason)? You can spend thousands inspecting several housing while buying none of them. And the seller may simply flat out refuse you access to the house to do an inspection, without an offer. Since this request is unusual I doubt refusing would narrow the pool of buyers significantly.
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Old 12-09-2011, 11:17 PM
 
Location: earth?
7,288 posts, read 11,662,656 times
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It's called "front loading," and it is smart for a seller to do. Get inspections, and put them in a binder, add to listing notes that they have been done . . .it is just smart and the house will be priced more appropriately, as well. The buyer can also get their own inspections, and should, but it is smart from a seller's standpoint to disclose everything up front. No surprises.
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Old 12-09-2011, 11:18 PM
 
Location: earth?
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The buyer should only inspect when an offer has been accepted and escrow opened.
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Old 12-10-2011, 12:36 AM
 
Location: Bike to Surf!
3,080 posts, read 10,331,693 times
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I guess I should have added more details.

The replies make sense, though. Yes, the seller could refuse inspection. Yes, I'll lose the money I put into an inspection if the seller refuses my offer. However, I'll lose it just the same if a post-offer inspection turns up problems that are so costly to fix that I have to back out of the offer. Then I'm also out the cost of approval plus the credit ding.

In this case, this is a forclosed REO that's been abandoned for months. The place is nice on the surface and the listing price looks good, but there could be major structural or habitability issues. I think that makes this the exception to the rule about waiting until the offer has been accepted to inspect. Otherwise I have to assume worst-case scenarios and build that into my offer. Anyway, I suppose I'll consult with my realtor, but I appreciate hearing lots of opinions. Keep them coming if you please.
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Old 12-10-2011, 12:44 AM
 
Location: Kailua Kona, HI
3,199 posts, read 12,242,039 times
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First of all, one of the main contingencies in any offer is that the Buyer approves and accepts the inspection. Otherwise, he can terminate the offer, submit a lower price based on repair costs, ask the Seller to remedy problems, etc. For another thing, they don't run your credit every time you make an offer. They run your credit to provide you with legitimate pre-approval pending full loan application on a specific property, if that all goes well you get final loan approval, then they run your credit again within a couple of days of closing to make sure you didn't go out and buy a motorboat or run up a bunch of credit card bills buying new furniture.

You need to sit down with an experienced realtor and lender (interview 2 or 3 in each category), and become well educated in this process. You'll feel better but most importantly, you will be a better informed buyer. You need to understand completely this whole process before you even look at very many properties because once you find the one you want, you should be ready to rock and roll on it.
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Old 12-10-2011, 01:21 AM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
27,156 posts, read 45,310,539 times
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Or... you can be a very informed buyer on your own (I have bought ONE of nearly 30 properties with the help of a realtor).

As with anything... only YOU are really at risk in any personal business transaction and YOU need to be well educated and informed. YOU can take care of this; find a mentor who SUCCESSFULLY owns / transacts in your chosen discipline (especially important w/ financial matters).

I found a few ole timers who have been invaluable.

Qualified inspectors are EZ to find.

YOU write a contract for offer (Purchase and sale agreement PAS). Inclusive to that document; BE SURE to have several 'walk-clauses' !!! I always use AT LEAST these as minimum: 'satisfactory physical and legal inspection, physical acknowledgment and approval of legal property boundaries, review and approval of zoning, easements, title report, submittal and approval of REQUIRED Owner Disclosure documents (varies by state), full approval of any health / permitting / inspecting agencies. And... "the approval of SPOUSE !!!". ( I do about 80% of these agreements without first involving spouse as a signer. No sense them being bothered till I've done due diligence.) Often I add the contract can be terminated for ANY REASON within an aggressive and specified time frame. I rarely have ANY cash on the line, 90% use "Note due on Closing". It takes about 20 minutes to iron out a bullet proof PAS (with a primary seller). Takes about a week or two with a realtor (or 2 or 4 involved).

I have never lost a worthwhile deal requiring these items, and I have been able to walk FREE often. (when required). Know when to hold'em and when to fold'em.

I offer great and aggressive terms (attractive to the buyer's SPECIFIC NEEDS), no hanky panky / funny stuff, several realtor friends use me to buy stuff that they are sick of dinking with. I am a NO non-sense investor. realtor's appreciate I take LITTLE of their time. (Sign here, poof, I'm gone) - I take care of everything from inspection, financing, and closing; and never see them after signing PAS. Frequently do everything via fax / scanner. I do deal A LOT with the title officer. (they do all the work anyway), I treat them right. They are your best advocate, tho they CANNOT counsel you.

I was somewhat petrified on my first home transaction @ age 19 with a really sleazy owner / operator / investor. BUT it all worked out (I learned a lot) and is very old history now. My monthly payments were $128.84, I knew I would be in debt forever...


I have bought and sold MANY props myself, commercial and residential. The residential stuff is quite trivial and there is LOTS of protection for buyers (and LOTS of unqualified 'advisers') GET references, but most importantly ALWAYS get proof of sustained successful business history... i.e. get to know the people on a RELATIONSHIP basis. If I see shiny shoes with dingle-berries hanging on them, I run the other way.

Work boots with lots of miles (and ditches dug) is my preference. Definitely no tours of town in a Cadillac, I have my image to protect!!

Last edited by StealthRabbit; 12-10-2011 at 01:37 AM..
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Old 12-10-2011, 07:45 AM
 
Location: Austin
7,205 posts, read 19,306,631 times
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I think it varies by location. In my area, a traditional resale, the inspection is done after an offer is submitted. For Foreclosures, some buyers do inspections prior to submitting an offer, however, the power is usually off so they can only do a visual inspection. Once an offer is accepted, they can have permission to get utilities turned on.

If there were foundation issues, you're more than likely going to notice. You'll see cracks in the doorways and by the windows, and you'll notice slopes and slants as you walk across the floor. You might not notice this with minor issues, but minor issues are completely different than what you're scared of as major issues.
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Old 12-10-2011, 10:22 AM
 
Location: Salem, OR
14,720 posts, read 35,651,961 times
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Quote:
Originally Posted by FalconheadWest View Post
For Foreclosures, some buyers do inspections prior to submitting an offer, however, the power is usually off so they can only do a visual inspection. Once an offer is accepted, they can have permission to get utilities turned on.
This is what I was going to say. They are all winterized out here with utilities off so an pre-inspect is useless, IMO on a foreclosure. You have to have an accepted offer in order to have the utilities turned on. Are the utilities on?
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Old 12-10-2011, 10:46 AM
 
Location: Bike to Surf!
3,080 posts, read 10,331,693 times
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Quote:
Originally Posted by Silverfall View Post
Are the utilities on?
It's winterized and power yes, water no.

This is all great advice, and I wonder if this thread shouldn't be moved to REO&Foreclosures?

The property is over 100 years old with a leaky fieldstone basement (has water). It's also got signs of trouble like uneven floors, at least one "temporary" support installed under a floor joist about mid-span, and very frayed old wiring left in place alongside newly installed lines. The house has been expanded at least once, so part of the foundation appears to be poured. Upstairs looks pretty good but when you go into the basement it's quite a kludge. There's also (identified) issues with the water and sewer lines and neighboring properties.

These are all problems I can identify, but I need professional advice to get an idea what really needs to be fixed and the neighborhood that the repair costs are going to run in. There's no way I wouldn't inspect, and my perspective remains; why bother with an offer before you know the worth of the property? Then again, if I can't get the water turned on without an offer, then I'll have to go in traditional sequence.
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