Should I Get a Real Estate Inspection?

When buying property, many buyers are concerned with making sure they are getting a good deal for their money. While a realtor will be able to give a buyer a lot of information about neighborhoods and expected home values, the one area they cannot help is determining the actual structural strength of the property.

The only way to get an accurate picture of expected maintenance costs as well as a good idea of what will need to be repaired after moving in is to get a real estate inspection. These inspections are performed by professionals who have to attend classes and pass a test in order to be licensed by most states. They are typically hired after a property goes under contract, and their reports are often cited when negotiating the contract. For example, many properties are purchased under the condition that the home inspector gives a satisfactory report. If the property cannot be repaired, it is possible for the buyer to walk away from the deal without forfeiting his or her earnest money.

A typical real estate inspection takes just a few hours and only costs few hundred dollars. They will usually start by checking the physical structure of the exterior of the house. Inspectors will look for cracks in the walls, signs of water damage, and other types of damage. Inside the house, they will look at the electrical and plumbing systems, the appliances (including the water heater and air conditioner), and some decorative features such as banisters and molding. They will also inspect the condition of other buildings on the property such as sheds, pool houses, and garages.

A home inspection report should note any visible defects, but they typically do not take apart structures in the home. For example, a home inspection report could point out leaks in plumbing components that the inspector can see, but it would not make note of a buried pipe that was not leaking noticeably. It would make note of standing water in the yard, however, and mention that a possible cause of their water would be a leaking underground pipe.

In most cases, home inspections allow a buyer to ask that several small items be fixed by the seller before the sale of the home is complete. In the case that a home is being sold “as is”, the report gives the buyer a list of items that they now know they will need to fix before they become bigger problems. When a home inspection report details major problems with a house, however, many buyers have to make some big decisions. Walking away is usually option, saving the buyer from the headache of making major repairs, but starting the hunt for a home all over again. Alternatively, the buyer can change his or her offer on the home; making sure that he or she has enough money to make the necessary repairs. Finally, a buyer can insist that the seller make the repairs before the sale is complete.

 

Commercial Real Estate Inspections

Buying commercial real estate is much different than buying a single home. Because it is commercial real estate and you are apartment building investing, you can use a due diligence period to get the best deal possible. During the due diligence period, the buyer, at the buyers expense, has the right to enter the property together with anyone they choose in order to inspect the property. Tests such as those for environmental problems, the soil, the air quality, hydrocarbon, toxic chemicals, carbon, asbestos, lead based paint and any other tests the buyer may deem necessary for the commercial real estate property are then conducted. Apartment investing is something that needs to be thoroughly checked out before the sale so there are no surprises that will end with the loss of tenants and money because the structure isn’t habitable.

Due diligence is a way for the commercial real estate investor to be certain there are no hidden problems. The process should be taken full advantage of every time a commercial real estate building is being considered. If you are a wise apartment building investor, you will be prepared for this and have experts to check for problems in the building. When one is found, the selling price may be lowered or you can request that the seller make the corrections prior to the sale.

This is similar to purchasing a used automobile. If you haven’t taken the time to have a mechanic look it over prior to purchase, you may find out too late that there are major problems with it. The same thing can be said for apartment building investing. This due diligence is a time given for just this purpose, and it’s crucial that it be used as such.

There can be many unseen problems when buying commercial real estate. A seemingly small problem such as lead paint can mean that until this paint is removed by professionals who are licensed to handle such a job, no tenants will be allowed to live in the building. This means that investing in a building such as this, unless it’s at a price that reflects the problem, should be considered carefully. The apartment investing situation should be one in which the buyer is aware of all of the problems and can get a price that reflects the need to do the remodeling work on the units. When that is completed, the units can then be rented at a higher rate than previously. A good real estate investor will have had this planned out from the beginning.

Should you bring a professional to inspect something on the commercial real estate property, and they find a problem, there is the option of offering the current owner less, or even to back out of the deal altogether. Depending on the problem, it may cost very little to fix, or it may cost enough that there will be no profit possible from the building. Know which type of building you are getting into by exercising your due diligence.