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real estate investment articles : real estate investment strategy – “Buying ‘Repair Needed Homes'”

 When working with the seller on items listed as “in need of repair” from a professional home inspection, buyers and agents need to tread very carefully. It is in no ones best interest that the repair negotiations turn into a difficult issue during the transaction.

Sellers and buyers must also understand the true function of a professional home inspection and that responsibility lies with the agents and the home inspectors themselves. The inspector’s report is a visual and informational inspection on the condition of the property at the time of the inspection. There will be items on most inspection reports that are in varying degrees of severity. The inspector should endeavor to communicate to the parties on whether or not repair items are serious in nature or simply “Honey Do’s” that are not an immediate concern. It is up to the parties in the negotiation to decide if, when, and how much to spend based on the information in the report.

As homes age mechanical and most structural items will have to be replaced or upgraded. There is really no other way around it. There are documented replacement averages for these various components of a home and that information should be taken into account along with the immediate defects to a home during negotiations.

There are several solution options and considerations, parties in the transaction can decide:

Is the seller going to fix the defects and maintenance issues before closing at their expense?

Does the seller feel that the cost of repairs and maintenance is already reflected in the asking price and not willing to solve the issues?

Buyers may request a home warranty be purchased at the seller’s expense to cover any concerns.

Is the seller willing take the cost of the repairs off the asking price?

Is the buyer willing to pay a percentage of the repair, especially if the repair is fairly elective?

Careful and tactful negotiations are required so that everyone comes out a winner. The inspection report is simply a tool for the parties involved to make informed decisions and negotiations. This is where the great agents do some of their finest work for their clients.

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Seasoned chief executive and entrepreneur with proven track record. Mr. Zar brings more than twenty years experience in operations, evaluation, investment and management of real estate assets. Sean is responsible for new asset origination, evaluation, analysis and due diligence as well as overall executive direction. Mr. Zar also gained insight into capital markets as the founder and president of CBA Capital, Inc., a Newport Beach, CA based investment bank and venture capital company. He also was the founder and CEO of American Income Securities, an investment company with more than $50 million in client assets. He also managed a technology venture capital fund where he was responsible for equity and debt investments in a wide variety of companies. Mr. Zar sold his interest in American Income Securities in 1999. Mr. Zar has been an active real estate investor in Arizona as well as Colorado and Southern California. Mr. Zar is focused on discovering undervalued properties.
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