Do you Inspect Fix & Flip Before Contract or During Contract?

[Isaac Fridmann]

Hey BP Fam, 

when looking at a fix and flip deal, do you bring out your contractors, inspectors etc. before going into contract and submit an offer based on the cost of rehab with no Inspection period or, do you submit an offer with an inspection period at which point you get all your crew down there?

Thanks in advance!

[Will Barnard]

There is not a one size fits all answer to your question as the true answer is this: It depends! It depends on your market, your situation, the seller, and some other factors.

In a seller's market or any highly competitive market, your offer is stronger with no contingencies or a very short contingency (i.e. 5 days or less). Your offer is weaker with contingencies or longer term contingencies. The best practice is to walk the site whenever possible and identify the deficient items, then put together your estimated budget for repairs. You make your offer based on this info. Once under contract, you can then pay for your professional inspections if you need that. Re-trading the price using your inspections is typical from some, but keep in mind that it should only be used when items that were totally hidden from your eye are found. Re-trading the price claiming the kitchen and baths need updating and it needs landscape and paint is NOT a valid reason to re-trade the price in my opinion as these were easily identified in your initial walkthrough.

If you make offers sight unseen, then you will certainly need an inspection period contingency and get in there with your professionals once under contract.