You’ve worked your butt off and now your agent calls you and said the bank/seller has agreed to the price and is ready to open escrow. What do you do now?
Step 1 – Go look at the Property Again
Once an agent tells us we are close on an offer we always go look at it again. In a typical week we look at over 20 properties (sometimes 20 in a day) so we like to get a refresher so we can get our numbers as close as possible. We typically take a lot of pictures and redo our mini-budget as exact as possible. If we don’t like something about it, or missed something, now is the easiest time to back pedal with the agent.
Step 2 – Identify any Problems or Unknowns
If the property has any potential pitfalls (structural damage, leaks, etc) or structural issues we bring in our hired expert on these issues and have them provide a quote or their opinion. Does it need that new roof? Is the HVAC system okay?
Step 3 – Redo the Numbers
I will go and redo all comps. Check how close my original ARV estimate was. Are properties selling in the neighborhood? Is a lot for sale in the neighborhood?
Step 4 – Order a Termite Inspection
We our in California, so termites are a problem and our inspector will give us a free inspection. When we sell the property you can guarantee our buyer will order an inspection, so we do the same. If there is any bad damage we try to negotiate with the bank.
Step 5 – Order an Appraisal
Almost always my estimated ARV number is within 5% of the appraisal. But it is nice to have a second opinion. We are talking a lot of money with each transaction, so I want to make sure I did not miss anything.
Step 6 – Review the Escrow Instructions and Preliminary Title Report
By now escrow should have documents ready for you. In this market escrow officer make it pretty clear they work for the bank and not you in REO transactions. So you have to make sure you cover yourself. If they send you with paperwork you are uncomfortable signing, refuse to sign it. This may save you big in the long run.
Step 7 – Get Quotes from your Trades
If you’ve made it this far, chances are you are going to close this deal. Now is the time to start getting your trades into the property to provide quotes on what you want to do.
Step 8 – Close the Deal
Now you’re ready to close escrow and start to fix the property!