Your offer is in escrow, everything is moving along nicely. The buyers are in love with the house, they even asked for access to measure for furniture and drapers! Then you get the request for repairs and
Schreechhhh… The brakes slam on the transaction!
The request for repairs is akin to the Moby Dick in length and seems to make your project look like it is about to fall over, burn down or grow enough mold to make the neighborhood fall ill! What are you going to do? No one would buy a house in this shape and how are you going to come up with the money to fix these issues?
Breathe, Relax, Dive
First, take a moment to really digest what is there from the buyer. Relax, this is not the last time this is going to happen and you can solve this with a little planning and preparation. Now Dive! It is time to hop in there and look at what was called out and what it really means, this is the BULK of how you are really going to solve this issue. Here are the steps we are going to take on DIVE;
- Review entire inspection report
- Note items based on responsibility and importance and asses situation.
- Walk the property and review with contractors
- Respond to Repairs
Reviewing the Report
The inspection report is the key to every request for repairs. If the buyer does not supply a inspection report how are you suppose to know that the items stated are even issues? The report is where your buyer got concerned about the home. Dive in and review the issues and verify that the report is accurate. Often times you will find that the inspector was lazy, or inefficient in a few comments and that the issue is not truly there. Eliminating these items right off the bat will save time. Next categorize the items by “Needs” to be completed for safety reasons, and buyer “Wants” them completed. You always need to take care of true safety hazards to ensure you are protecting yourself from future issues.
Was it part of Your Original Scope?
Now that you have lined the items out, know which ones are not really issues and have categorized them it is time to make sure they are not items that needed to be done on the original bid. If they are, get your contractor back out to fix them as part of their original scope. It is important that you note how those items happened and didn’t not get caught on walk throughs or on the final punch list.
Walk through with Contractors
For the items left and not responsibility of the original contractor you need to bring in 2-4 contractors to bid the repairs out. Many times these are going to be specialty contractors such as, sewer line repair, electrician or plumber, to get this portion done. Just like when you bid the house out in the beginning you are going to bid them out and then compare apples to apples on each bid to ensure you are getting the same bid and measuring it on a fair playing field and you are getting the most for you buck.
Respond to Request
Time to respond, we have gathered the information, we know what it will cost, we have decided which items we have to do and what items we are willing to do. Time to write up the response, here is what you MUST do to make sure you don’t have issues later on;
- Be specific, being general or vague leaves areas for misinterpretation
- Outline in email why you are doing the items stated, and not doing others.
- Require release of ALL contingencies with the acceptance of repairs
Following these steps is crucial, and it is incredibly important that you are SPECIFIC on your repairs. If you can read the repairs list and have a doubt at all about what is being done go back and outline it better. The last thing you want is a misinterpretation holding up escrow at the very end of the transaction.
For more information on request for repairs check out this VIDEO. If you are looking to got further with Real Estate Investing check out the The Better Tomorrow Group Mentorship site, grab your FREE 7 Day Access Here.
Andrew T Greer
CEO Better Tomorrow Group
Andrew is an active investor, speaker, Realtor, serial entrepreneur, and educator in all that is Residential Real Estate. If you would like a FREE copy of his book follow this LINK. If you would like to follow him on Social media you can find him on Instagram @beastmoderealestate and @bettertomorrowgroup, on Twitter/Periscope @TheBTGRoup and Facebook at https://www.facebook.com/bettertomorrowgroup/ Also on Snapchat TOO @BeastModeRE