Home Inspections and Value

[Joseph Insalata]

How do you determine the value/price of home? Would you recommend bringing a contractor when inspecting a house for the first time?

[Frank Chin]

No, an inspector contractor cannot determine the value of a home.

I'll give you an example. I bought a pre foreclosure for $70,000, years ago, in 1983. My partner, a local realtor found the deal, and determine and the time the land value is $70,000. The ARV of the property at the time was $125,000, in good condition.

How did he determine the land value? Developers/builders will pay so much so they can knock the property down and build a new one. The realtor found such buyers. So with this analysis, how much can a contractor assign a value to the structure inside. Zero?

The seller found a contactor to do a rehab, bought the materials, and the contractor agreed to do the work for $10,000. The deal was, I took over the project. So my $70,000 contract includes about $10K in materials.

Long story short, it was supposed to be a flip. Found a buyer paying $130,000, but the deal fell through at the last minute. I closed on it, kept it waiting for the right moment to sell. I still have it, and it's value now about $400,000 according to Zillow. It's mortgage free. It cash flows around $2K/month at market rent. I charge a little below market.

So the question is, how would an contractor inspector be able to tell me about it's value?