Have general contractors walk through property?

Question

Michael Hayworth · Answer

How many properties have you purchased? What's your track record, and what's the incentive for a GC to come out on a house you haven't even made an offer on?

I don't know your market, but in most areas of the country, good GCs are very, very busy. My company actually stopped doing work for investors (other than my own houses, of course) because margins are lower and we used to field calls from dozens of newer investors who wanted us to come look at houses that they didn't even have under contract. Many investors are not very respectful of a good GC's time, so they end up stuck with weaker GCs who are desperate for business.

When I did do investor work, we'd come out if you had the house under contract and were in your option period, but we wouldn't go out in a pre-offer visit. There's no guarantee you'll even make an offer or if you did, that it would be accepted. My time is too limited and too valuable to do a bunch of visits on houses you don't even have under

Even when they did have it under contract, I often had to spend time educating a newer investor that the wholesaler he bought the house from was, hmmm, overly generous with his ARV estimate and overly stingy with his renovation cost estimate. It's really frickin' depressing to go to multiple houses with multiple investors who think they're going to clear $50,000 on a flip, only to have to tell them that, no, we can't cram $60K of reno into a $35K budget (and, BTW, those comps "within a mile" are for a neighborhood across a major intersection with very different characteristics, so your ARV is probably $20K lower than you thought).

Of course, all this is different if we'd done a house or two together and I know you're credible and not wasting my time. If you're new and haven't bought any houses yet, best thing you can do is get recommendations from other investors for a good GC, or meet one at REI meetings, and let him know you need some help, but that you're credible and do plan to buy homes that will need renovating.

Good luck!

Chris T. · Answer

@Nestaly Nin

Yes, it is always a good idea to have several contractors come out and give you a SOW. Make sure it is as DETAILED as possible. And put in a time line for completing the project as well.

1 of the benefits of having several GC come out is one of them might see something that the others have missed. Or point out ways you could do different things. So when you decide which contractor you want to use, you can compile everything together, and have that contractor rebid.

Remember to always use a home inspector after you have the property under contract. The home inspector might see things your other GC missed. Plus if there are any new major items not discovered previously, you may have the opportunity to either back out of the contract or renegotiate - per your sales contract.

Josh July · Answer

I would say that your best course of action is to not bring a contractor until you have an accepted offer; instead you probability should have a home inspection done to see if thier are any major issues that could cost you big in both time and money...

Nestaly Nin · Answer

Account Closed Okay that seems affordable in the scheme of things. That also makes me think, how would I go about a GC bidding process? Might something like that only be available after closing?

Nestaly Nin · Answer

@Chris T. Thank you! This will definitely help when I get a hold of a few good GCs.

@Michael Hayworth I have yet to purchase any property. I agree, it would be foolish to waste anyone's time on anything that isn't locked down. To answer your question, we are currently under contract. The home inspection proved to be very beneficial, the garage is useless due to foundation issues and the rear porch is in bad shape and to make it more interesting the seller had "someone" make an addition onto it so I'm sure you can imagine what the cluster may look like. Attending an REI meeting will be next on my list. Thank you for your time!

Account Closed I absolutely considered paying for the GC's estimate but that begs the question of how much would be fair for everyone?

I appreciate everyone's thoughts and suggestions!

Josue Vargas · Answer

NO!, you need a professional unless you know what is to be done!  You give them a SCOPE OF WORK, they do not give you one!!! you are the boss, make rules from the beginning, and watch for those who wants to charge you more than you ask...

Hire a good inspector to highlight the defects of the propety, as its usually regarding for you loan, or private loaner).

depending on the condition of the house, you ay have ore than one contactors for each task order (floors, kitche, bathroom, outside/inside paint, etc etc... its a long list.  Do not trust general contractors, they will charge you the 20% of the local contacto you can manage in town!... yes, for each one of them!

If you decide with general contactos, pelase have them interview with a statement of work, equal to them, before hand, and meet them (yes all of them) on the same time on the same place to discuss the Scope of Work!!! its competition!

Malcolm Lawson · Answer

As a Realtor I have seen clients do this to estimate the repair cost many times.  It is probably the most accurate way to estimate repair cost on a property.  Most contractors will give you a free estimate for the work needed.  The only thing to be concerned about is if you do this too often.  For example most contractors probable are not willing to spend the time to do this for 4 or 5 properties without any guarantee that you will even buy any of them.

If you are having a hard time finding a contractor to do a walkthrough for you then offering them a small fee may help.  I would think anywhere from $25-$100 would be enough depending on how in depth the work is.  Also, if you have the property under contract and hire the contractor during your inspection phase, then this may also indicate to the contractor that you are serious and not just waisting there time.

I would just start shooting out emails to contractors and ask if they give free estimates.

Sam Shueh · Answer

I have seen contractors coming to homes looking at this and that since late 1990s stating it will cost $ blah blah-all inflated value to bring it to good condition. The buyer brings in an offer all get rejected being too low contractors factoring more repairs than needed.

The ones that get the property offer accepted use inspectors to see if there are anything not built to code. They are the ones getting the homes. The exception is my structure engineer does not want to inspect under the home I now use a foundation contractor for seismic retrofit work.

One needs to have an idea what is norm and what is needed especially you are renting both units out.

Mike Cumbie · Answer

HI @Nestaly Nin,

Another thing to consider is that you have a due diligence period. That time frame is part of the official contract. I normally recommend my seller does not allow more than 7 days. The contract also states who is allowed on the property during the period (Home inspector, engineer, Radon test, Lead based paint etc). So make sure you have it in the contract you plan on bringing in several contractors. If you do not the listing agent can (and I would recommend) not allowing access to the property.

There is nothing from the sellers perspective that can go good with allowing numerous inspections that are not contracted. Very often even on retail sales the buyer wants to come in and measure for curtains or come in and just see if the couch will fit. I recommend to politely deny the request. It never fails that I get a call later that night. "The buyers were in and saw there was a ......... that they didn't notice during the inspection". "They are requesting a credit of....". "They didn't realize that the front room carpet was tan and they just can't live there we have to cancel"

Good Luck!

Jeff Bridges · Answer

I've paid $200 for a GC detailed walkthrough and estimate and was willing to deduct that from the project cost if I hired them. That covers travel, walkthrough, research on materials, time, and then writing up the estimate. Other GCs have done it for free, esp ones I've used before on prior projects. I actually create a simple SOW by rooms and by interior/exterior organization based on the inspector report and my own walkthrough so I have a detailed list of repairs for them to review and know what types of materials I have in mind for flooring, fixtures etc. This allows me to get pricing estimates for identical work between each of the contractors so I can compare apples to apples. While contractors will find things you dont notice initially, they might also "assume" you want to put porcelain tile in the bathrooms when all you need is sheet vinyl for your rental. Each contractor might assume different repairs or level of materials for each repair project, which can throw off your comparisons. If one guys estimates vinyl plank and the other guy just swapping existing carpet, those costs will be wildly different. I think your chance for getting charged for these walkthroughs/bids is higher if you look like you are fishing for them to not only identify the repairs needed but also estimate the costs for those projects and then provide a detailed estimate with the same. Even with free walkthroughs, I don't necessarily get a formal estimate in a timely manner unless the project were to start next week. This is understandable because good GCs are busy focusing on more immediate paying gigs.

Have general contractors walk through property?

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