Even if you have been in the business for a while, successfully completing a large number of transactions, it still pays to have your property inspected. You may think you know everything there is to know about a property, but all it takes is one oversight to cause a severe financial setback. It is amazing that many investors will balk at paying a few-hundred dollar inspection fee when they have already coughed up hundreds on a title search and other pre-purchase items. What you spend on the inspection could save you thousands of dollars down the road.
Knowing real estate does not mean you know every inch of the house and its structure. There are many items that can be red flagged on an inspection report, but the most common ones are: roof, electrical, foundation, plumbing and heating systems. These are in addition to any issues related to mold or water damage. What you see from the street view or even inside the house may not tell the whole story upon closer inspection. The roof may appear fine, but once the inspector takes a look, they may find loose shingles, rotting tar or other damage that can be an expensive repair.
The same applies to the electrical foundation. Unless you are a certified electrician, you want to stay away from any loose wires or other questionable situations. What may appear to be an easy fix could turn out to be more than meets the eye. Much of what you will find on the inspection report deals with items that you can’t see. A room may smell moldy, but with no physical evidence, you could dismiss it as just a damp room. The inspector will take a closer look and see if what is behind the walls could cost you thousands.
The inspection is different from an appraisal in that the inspector works for you and the appraiser typically is ordered by the lender on a mortgage. This is important. The inspector has no skin in the game and can offer an unbiased evaluation based on what they see. The process may be long and the report difficult to sift through, but in the end, you should know that their findings are based with your best intentions in mind. They have no reason to state damage that is not there to decrease the value because they are not part of your transaction in any way.
If the inspection comes back with items that cause you to walk away from the deal, you should view this as money well spent instead of wasting money on a deal that doesn’t close. This is the cost of doing business. Sometimes the money you spend before the deal will be the best money you can spend. Think of the alternative: You close on the deal and only a few weeks later discover issues with the plumbing or electrical that will cost you $10,000. At this point, you have no choice other than to fix it if you want to sell or rent for top dollar. That is money that you have to pull out of another account or repay with credit. This could set you back and prevent you from another deal. All of this could have been avoided if you had just spent the $300 on an inspection.
The inspection is an important part of the buying process that should be done on every deal. Even if you know the business and think you know the property, it is still a good idea to get an extra set of professional eyes offering an opinion on the property.