Posts Tagged ‘property inspection’
Conduct a Residential Property Inspection
Part of due diligence for profitable real estate investments is property inspection. A 20/20 understanding of property condition eliminates the risk of making costly mistakes and bolsters your negotiating leverage.
Meet the Decision Maker
Assuming you are evaluating a property to purchase, conduct the inspection with whomever can make the decision to sell, usually the owner. Inspecting with the decision-maker develops rapport and ensures a mutual understanding of the condition. Surprisingly, many owners are not aware of the true condition of their property; on the other hand, others may inform you about problems that are not readily apparent.
Prior to meeting, ask the seller to bring a copies of the deed, survey, tax bill, leases, and receipts for any major work on the property. These documents will familiarize you with the property; moreover, the search of the same will cause the seller to invest time in the negotiation. The more time invested, the more they will want to reach an agreement-nobody wants to invest time for nothing.
Inspection Tools
For a thorough inspection, you need the proper tools. Your inspection toolbag might include: a cro-bar, binoculars, electrical tester, camera, tape measure, flashlight, extra batteries, sandwich bag, clipboard, square, purchase contracts, cordless drill, marble, and probe (screwdriver).
1) Exterior Inspection
Begin with an exterior assessment. With clipboard and pad, record impressions about neighboring property, driveways, walkways, stairways, and handicap access. Note the parking situation, grading, and landscaping. Inspect the condition of exterior walls, doors, and windows. Use your binoculars to check the roof, or if possible inspect it close-up. Is it cracking or thick with too many layers? Are the gutters and downspouts in good condition? Water is destructive, so pay attention to drainage. Look for soggy conditions, peeling paint, cracking mortar, algae and mildew.
2) Major Systems Inspection
The basement is one of the most telling parts of a property. From there, begin assessing the major systems. Inspect the foundation by studying the exterior walls for sandy, cracked, or deteriorated mortar. To find air leaks, look for cobwebs-spiders spin them near openings to prey upon insects who enter from outside. Explain this entomology lesson to the seller as you pick at those energy inefficient cracks. Check the sump for water which indicates leakage. Water attracts termites, so use your screwdriver to probe joists for rotten wood.
Take notes about the heating and cooling systems. Try to find a date on the furnace or boiler, and on the hot water heater. Look for maintenance records and read the entries. Pay attention to the plumbing. Copper and plastic pipes resist corrosion, unlike galvanized pipes which corrode and crack. Check to see if the electrical system has been upgraded from fuses to circuit breakers. Read the main breaker to learn the amperage (e.g. 110, 220.) The more amperage, the more capacity for amenities. Also, investigate the exhaust duct work from the furnace and hot water heater. Poor connections and soot indicate dangerous, possibly fatal carbon-monoxide leaks.
3) Living Area Inspection
Next, inspect the living area. Check for an alarm system and smoke detectors. Note the smell-it can affect value. Tally the number of bedrooms and bathrooms. (According to FHA, a “bedroom” is not a bedroom if you must walk through it to access another room.) Many older homes lack closet space, so make note. Inspect the composition and condition of floors and walls. Test all windows and doors for ease of use. Also check that all electrical sockets are grounded (three prong) and functional (you can use an inexpensive electrical tester.)
A large part of any home’s appeal is determined by the quality of its kitchen and bathrooms. In the upstairs bathroom, simultaneously flush the toilet and run the sink and shower to test water pressure. Make special note of updates, exhaust fans, storage space, and other amenities such as washer, drier, jacuzzi, etc.
Beside all of your inspection assessments, estimate costs of repair. For help, consult with a general contractor or simply pick up an R.S. Means construction cost guide from the hardware store.
Presenting the Inspection Report
Once you have fully evaluated your inspection data, you can use the various “value-deficiencies” to leverage your case. Remember however, even neglectful owners grow attached to real estate and can be easily offended. Yes, properties in less-than-retail condition should sell for less than retail. Notwithstanding, defects should be presented in a friendly, helpful way. Make it your mission to help the seller find the value of the property. To add credibility and maximize your negotiating potential, enhance your findings with an inspection by an independent third-party.
Concluding Carefully
Although property condition affects value, a profitable transaction is determined by cash flow or equity. Money can fix even the worst looking property. Make your decision based on the numbers, not the condition.
Author: Ian Parrish
Mr. Inside Out thoroughly inspects all major components of the subject property to expose unknown defects and advise you of future maintenance about your home once the purchase is complete.
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