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When purchasing an investment property, you cannot purchase without a final walkthrough. It doesn’t matter how many times you’ve seen it or how confident you are in the sale—there is no substitute for a final walkthrough. We’ll explain why.
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What we might’ve missed if we didn’t do a final walkthrough
On one of our more recent investment purchases, we went to view the home for a final walkthrough. We already had a home inspection done—this was just a final stroll through the property to make sure everything was okay.
So, we went through room by room, inside and out, just checking the home for anything major we might’ve missed on the day before closing. After all, we put in our offer that we wanted a final walkthrough, so why not take advantage of the opportunity?
That’s when we saw it. On the roof, flapping in the wind, were several loose shingles and a patch where many more had blown off! Never a good sign for a property you’re about to buy—especially not the day before you buy it.
Time to fix the situation
After seeing the roofing damage, we immediately alerted our lawyer. He quickly leaned on the seller’s lawyer and got them to do a hold-back. This gave us time to figure out what it would cost to repair the roof. We did eventually close on the property—they fixed the roof, the hold-back was released and the seller got their full asking price for the home. For us, we paid what we expected to pay and got a newly-fixed roof out of it, avoiding the cost of repairs.
The importance of a final walkthrough
Talking with my lawyer, he was glad that we did the final walkthrough. Being able to alert him to the damage in the 11th hour, before we signed any paperwork, was crucial in getting it fixed. The walkthrough took all of an hour, but saved us upwards of $1,500!
But, while this situation turned out well, my lawyer had me do an exercise—something we would never have thought of before.
Let’s say we didn’t do this final walkthrough. We purchased the house as-is and found the damage after we signed the paperwork. We could still bring it to my lawyer… but we would have some trouble. He asked us a series of questions:
- Were there pictures from the home inspection?
- Did you take pictures before buying the house?
- Do you have any proof the roof was not like that when you agreed to by the home?
Then, he asked us to apply it to this situation. So, we looked at the home inspection pictures. But there were no angles that showed the specific spot we had fixed. Then, we looked at my photos of the property. No roof pictures. We even looked at the listing photos to see if we could spot the damage. No dice. We had no proof.
If we would’ve skipped the final walkthrough we could’ve been liable for the shingles that blew off the roof. And, had we signed the lease for that property, I would’ve inherited that problem.
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Build-in a final walkthrough clause
It doesn’t matter if you’re buying your first property or your 50th. It’s very important that, in every single offer, you specify you want to do a final walk through the day before closing.
This is ideal too, because sometimes if you’re getting the property in transition—you can now see things you couldn’t before. After all, the tenant’s belongings are gone. You can see if there are marks on the walls, stains on the floor or hidden damages you missed earlier. It’s just one more opportunity to see anything you didn’t see or notice before during the home inspection.
The most important part of this all is a liability. If you do find something—anything impacting the value of the home—it allows you to bring it up and to have things amended before closing. You don’t even need to have them amended if you think you can fix them yourself—it might just be an opportunity to adjust the closing price in your favour!
Regardless of the transaction, you always want to have that clause in your paperwork to have the ability to do a final walkthrough inspection. It saved me what would have been a $1,500 this time and countless hundreds and thousands of dollars other times.
What to do if you’ve already bought the property
Now, on the flip side, let’s say we didn’t have proof. We purchased the property without the walk-through and only noticed the damages after the fact. We’ve still got options… however, they’re not great.
According to our lawyer, the best option is to try and work out a repair agreement privately. This likely won’t work at all, since the property is no longer the former owner’s responsibility. They might decide to work with you privately if there’s a threat of small claims court… however, they’re more than likely to fight that as well. You can test your luck in small claims court, but be prepared to spend countless dollars on legal fees and frustrate yourself for an extended period of time.
The most realistic option? Fix it out of your pocket and learn a valuable lesson about doing a final walkthrough next time!
Always do the walkthrough
It takes no extra time or energy to add a final walkthrough clause to any contract you’re signing. And, for a short time, it does take you to walk through the property, catching something costly is well worth the time.
Ask yourself this simple question: Would you rather spend an hour and save $1,500 or save the hour and spend $1,500? Because, at the end of the day, the decision is that simple! Your time may be worth a lot, but do you think it’s worth $1,500 per hour? Probably not. Do the walkthrough!
But first, if you want to look at financing options for upcoming investments, click the link below for a free strategy call today.