They are essentially a “fixer-upper” flipping company. Their pitch is that they will buy your beat-up home as-is and save you the headache of repairs, listing, etc etc.
Although I welcome the business, its obvious that these inspections are relatively risky from an error & omission perspective. My reports are heavily involved with this company’s ability to be profitable.
I was wondering if anyone has any pointers on pre-listing inspections of older homes. On one hand, it seems like my clients are hunting bears, not squirells. They probably don’t care about the cracked switch face plates or most of the “home manual” info items when deciding how much to offer this homeowner for their home. So i’m trying to filter out some of the “noise” that I would normally put in a report. But I also need to make sure they cant sue me for anything.
Anyone have any wisdom on how to approach jobs like this? Would you tailor the report for this situation, or forget everything you think you know about the situation and treat it normally?
I would say do your normal full inspection with all the details you would include on a buyers inspection. It is your client’s (the flipper’s) decision on how to act upon your report. If they don’t repair something you reported, it is their bad not yours.
Yea, I guess so. Its tough, I’m actively weighing out how worthwhile this client is. One of the homes I inspected for them was a 2021 home where I suspect the homeowner was just using them to attempt to get a free warranty inspection, but the other houses have been old, in rough shape and take a LONG time to inspect and edit the report. And then add on the fact that this client will be relatively determined to pick out things I missed and get compensation for it… new construction seems pretty cushy after doing a couple of these.
Yes… sit your ass down with the Client and work out a SCOPE of Inspection that works for them. You work out a fee that works for you. You negotiate the fee for what they want inspected. Your report is based off of that scope, as does your Inspection Agreement (which includes a copy of the agreed upon SCOPE)!
Michael- The client is the flipper, not the future buyer. If you do not know the importance of knowing and performing to your clients “expectations”, you need to stop right here and figure it out.
If your state is FUBR concerning their HI Rules and will not let you modify your inspection as your client request, don’t make it a “Home Inspection”. Make it a Commercial Inspection based upon the contract you and the flipper are about to negotiate. Have a problem, get your lawyer to do it…
Interesting idea, thanks. I’m still performing these as a Texas regulated house inspection, so I’m under typical obligations. I guess that answers my question and that’s how I’ve been doing it.
I just hadn’t ever considered a pre inspection like this before so i figured I’d see if anyone has anything to say about it. I suppose it’s no different than a resale inspection for an investor, though.
This is why many inspectors have a tiered rate structure that is at least partially based off age. For me, age is a bigger consideration than size in my pricing structure. It took a few underpaid inspections to kinda figure out where the pricing should be on older homes. I also like to get a look at the listing pictures before giving a quote so that I can get a feel of the condition of the property, always taking into account that the agent’s photographers are usually really good at their craft.
When I do old houses for investors, I perform the inspection as usual. However, their tolerance level is different than a retail buyer. With an investor, I am less likely to report loose door knobs etc. That is about the only thing I do differently unless we have modified our agreement.
You’re not clear if you are performing pre-listing inspections for homes they are selling or pre-purchase inspections for homes they are buying to flip? In either case if they are 1 - 4 family residential homes they fall fully under the control and rules of our license. That obviously includes all of the ignorant things we must report on. Also as you know we certainly don’t know all of the ignorant things until someone calls TREC to file a complaint or tries to tap your E&O.
Since you are trying to “filter out some of the “noise”” IMO the best approach to this is to review the TREC required SOP and essentially revise it to be very specific what you will be inspecting and to what level. You can make this “New SOP” as a contract addendum that they will need to agree with. You are allowed to do this via Rule 535.227(f), “Departure provision”.
Two other items you may want to consider:
A limitation of liability to the amount they paid for the inspection.
A clause they will indemnify you in the event the home seller or buyer attempts to use that report against you for some reason.
When you write the report ensure that you are adding proper disclaimer language for anything that was not contracted for (Departed from) and/or areas with significant reduction in scope. That can further help you defend yourself in the event that company or a home seller or buyer wants to chase you down for something.
If the company is not happy with this approach then walk away from it! You have to much on the line to lose by trying to be over accommodating for them.
Well now I was trying to be helpful and you seemed to be offended by it. So let’s go down that route.
To start your posts are not clear and you use a term “pre-listing inspections” which can mean anything if you define it at first but is generally used to describe a “Seller inspection prior to listing”. You then describe an inspection you performed for them where you believed the homeowner was trying to use them for a free inspection indicating you’re doing this as a “Buyer’s Inspector” for this company. So there is where my question came in that you apparently for an unknown reason are offended at.
Your first obvious problem is a deficiency in writing skills which I fully expect also is found in your reports.
Your second obvious problem is a lack of ability to comprehend written word and an inability to conceptualize what you have read. Not only did you appear to not comprehend a basic question (it did have a question mark at the end) but you also fail to comprehend the very SOP you are supposedly trained to understand. Rule 535.227(f), “Departure provision”, is very clear to understand and if you can conceptualize properly you really would not need someone to even answer your question and can come to the very conclusion I provided you as well as others regarding defining the scope of your inspection.
Your third obvious problem is the need for reinforcement for your preconceived end result instead of actually having he confidence to execute your own plan.
You are overly concerned about that investing companies position as noted by the following statement. There problems are not your problems and the sooner you realize that fact the better off you will be with regards to your concerns about E&O risk and being sued. You also fail to understand that the dumb “cracked switch face plates” is a defect and one of the most stupidest things to be disciplined by TREC for.
Do you even realize that TREC has a group of Staff Attorneys waiting to just to rip your azz when a complaint comes in about the broken faceplate you did not report? Once they go through your well less than stellar report they will have found plenty to add to that list of missed items and errors. I fully expect to see you on the TREC Disciplinary Actions search page one day! By the Way you do realize you are already visibly violating the TREC rules right here on this bulletin Board? Just another thing to add to your reaming when you visit with TREC Enforcement Division.
With your lack of confidence in what you need to do for this client it has already been suggested that you speak with an Attorney. From the way you act here I would second that suggestion. At the very least when your Attorney misunderstands the TREC rules and leads you astray you may have somewhat of a defense when the complaint is filed against you!
I’d happily do such an inspection.
I’d price and treat it as a commercial inspection.
It would not and should not be seen as a replacement for a later buyer’s inspection.
It should not be done under the Nachi SOP, because it’s just not the same thing.
Indeed, you’re hutting bear not mice. You can offer the fix-flip company a lot of value by giving them a punchlist of what needs to be done to bring the home to sale ready condition, and in what order. This is FAR BETER for everyone than their having a low end contractor come in and paint over crap, then having the homeowner later need to deal with the consequent hidden defects.
I’d work out a scope with the company, and produce a punchlist for them. It would not look at all like a home inspection. The report could look a lot like the job spec for a contractor:
Replace furnace, which is leaking CO due to a cracked exchanger.
Replace standard fuses with “Type S”, to avoid future wrong fuse hazard.
Install new range hood pipe.
Tear off roof, repair rotted rafters. Re-sheathe, adding R30 solid foam insulation on top. Shingle.
Clean and paint
Defer and Disclose
Rear fence falling down
Older pump on well.
60 amp main service, considered obsolete for modern load needs.
Water heater from 1990
Knob & tube wiring without observed modifications or issues