Are you torn about whether to conduct inspections when buying a property under contract? It’s a common question among investors, but the answer is a resounding yes from both newbies and seasoned pros. The key reason is simple: you need to have a clear understanding of what you’re getting yourself into. However, there’s a hidden gem in inspections that many overlook – the opportunity to negotiate again based on the findings. This second negotiation phase, known as Negotiating the Resolution of Unacceptable Conditions, involves demanding the seller to address defects or provide a credit. Let’s delve into this essential aspect of property purchases.
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The Second Negotiation Phase:
- It’s crucial to understand that inspections pave the way for a second negotiation round post-sale agreement.
- This negotiation typically revolves around resolving defects or receiving credit from the seller based on the inspection report.
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Negotiating the Resolution:
- A thorough inspection report often identifies a multitude of issues, ranging from minor to major.
- It’s vital to focus on significant and costly items in your resolution requests to streamline negotiations and avoid disputes over trivial matters.
- Remember, asking for more than what you want allows room for negotiations and potential compromises.
- When Not to Use Resolutions:
- Properties sold "as is" or post-2008 crash REOs usually do not entertain resolution requests.
- While acquisitions with such conditions may not involve resolutions, conducting inspections remains advisable, especially for new investors.
Before submitting a resolution to the seller, swift action is key. Schedule inspections promptly, including scoping sewer lines, and ensure to submit resolution requests within the inspection period. Remember, in negotiations, it’s the size of the problem that matters more than the number of issues.
Major ticket items like roofs, sewer lines, and foundations are pivotal in property negotiations:
- Roofs with limited lifespan may need replacement for insurability.
- Sewer line issues require repair or credit considerations.
- Foundation problems warrant expert evaluation to ensure property stability.
Receiving a resolution from the buyer can be daunting, but it’s essential to be prepared to counter strategically. Avoid getting caught up in minor details and prioritize significant expenses for repairs or credits. Flexibility and strategic compromises play a crucial role in successful negotiations.
In conclusion, property inspections are not just about understanding a property’s condition but also serve as a powerful negotiating tool. Don’t underestimate the impact of inspections and resolutions – they can translate into substantial savings and benefits in real estate transactions. Embrace inspections as an integral part of your property buying process for long-term success in real estate investments.
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