Investing in real estate is one of the biggest financial decisions many people make. But whether you’re a first-time buyer or a seasoned investor, skipping important steps can turn opportunity into disaster. Pouyan Broukhim, owner of PB Financial Group, stresses in his recent video that the best way to avoid costly surprises is to always get an inspection report before you close a real estate deal. Overlooking this advice can lead to massive repair bills, missed profits, and regret.
The Importance of a Thorough Inspection Report
A detailed inspection is the foundation of any smart real estate purchase. Think of an inspection report as your insurance policy against the unknown. Closing on a property without this information is like buying a used car without lifting the hood.
Why is an inspection so important? Because homes often hide expensive problems that only a trained eye can spot. What looks like a solid structure from the outside might hide foundation cracks, outdated plumbing, or a damaged roof overhead. Missing any of these dangers during your initial walk-through can end up costing you tens of thousands of dollars and months of extra work.
A professional inspection uncovers issues that are easy to miss, including:
- Foundation problems: Cracks, settling, or water intrusion that compromise the safety or stability of the home.
- Plumbing issues: Corroded pipes, hidden leaks, or old systems on the verge of failure.
- Roof integrity concerns: Leaks, missing shingles, poor drainage, or signs of age that threaten the home from above.
- Electrical and HVAC problems.
- Termite or pest infestations.
Here are some of the most common problems uncovered by inspections that can drain your budget:
- Severe foundation cracks or shifting
- Leaking or corroded pipes
- Water damage behind walls or under floors
- Roof leaks or missing shingles
- Hidden mold growth
- Faulty wiring or outdated electrical panels
Understanding Your True Costs Before Buying
The real threat isn’t always a broken pipe or a cracked beam. It’s not knowing that those problems exist until it’s too late. When you walk into a real estate deal, you need to have a clear picture of every potential cost before you sign anything. Know your true costs so you can avoid surprises.
Knowing your costs up front does more than ease your mind. It protects your margins. If your goal is to flip the property for a profit or to hold it as a rental, making accurate predictions about expenses is vital. Unexpected repairs can wipe out your gains faster than you think.
Let’s break it down with a real-world scenario:
Suppose you buy a house for $500,000, thinking it only needs cosmetic repairs. After closing, you discover major foundation issues and a leaking roof. Repairs cost an extra $60,000, which you hadn’t planned for. Your projected profit disappears, and suddenly the deal no longer makes sense.
The smart way to avoid this is to negotiate a lower price for properties with issues—a process known as compensation on the purchase price. This means adjusting your offer to account for repairs you’ll need. If the inspection finds $15,000 worth of plumbing upgrades and roof work, that amount should come off the price—or you risk overpaying.
Checklist for estimating total project costs:
- Repair costs from the inspection report
- Upgrades or remodeling planned
- City permits and fees
- Holding costs (taxes, utilities, insurance)
- Cost of professional help (contractors, inspectors)
- Buffer for unexpected expenses
Always factor in every dollar before you commit. Avoid surprises and protect your investment.
Common Costly Problems to Watch For and Their Impact
Some issues impact a property much more than others. Ignoring these three big-ticket problems can be the difference between a profitable deal and a financial loss.
Foundation Issues
Foundation problems are often the most expensive to repair and can undermine the structure entirely.
- Cracks in walls or floors
- Doors and windows that won’t close properly
- Uneven or sloping floors
- Visible gaps between walls and ceiling or floor
These issues suggest major movement or settling. Left unchecked, foundation issues can cause everything above them to shift or crack. Pay close attention during inspections and budget for possible repairs if you see these warning signs.
Plumbing Problems
Plumbing issues are common, especially in older homes or properties that have been vacant for long periods.
- Stains on ceilings or walls
- Low water pressure
- Sounds of water running when taps are off
- Slow drains or foul smells
Leaks can cause unseen water damage or mold. Worn-out pipes can break, leading to expensive fixes and water bills. An inspector will spot these problems before they turn into emergencies.
Roof Problems
A bad roof lets in water, damages interiors, and requires quick attention to prevent further issues.
- Curling or missing shingles
- Signs of water leaks in the attic or ceilings
- Sagging in the roofline
- Moss or algae growth
Roof repairs can quickly reach five figures. It’s one of the first things buyers should ask about. If you spot any problems, add those costs to your calculations or negotiate a price reduction.
How to Use Inspection Results in Negotiations
No one wants to overpay. Inspection findings are powerful tools for buyers in negotiations. The goal is to demand a price reduction or factor repairs into your offer so you’re not caught off guard after closing.
Here’s how you can use inspection results to your advantage:
- Provide the seller with a copy of the inspection.
- List out required repairs with real contractor quotes.
- Show how these costs impact your budget or resale value.
- Request the seller complete repairs before closing, or
- Adjust your offer by the estimated repair costs, keeping your bottom line intact.
Practical negotiation tactics:
- Demand price reduction based on the inspection findings.
- Request seller credits at closing to offset repair bills.
- Ask for repairs to be handled before you take ownership.
- Use major findings as leverage to walk away if terms aren’t fair.
Stay calm, keep discussions factual, and don’t hesitate to move on if you can’t reach an agreement that works for your numbers.
Why Avoiding Surprises Is Key in Real Estate Investing
If real estate teaches one lesson over and over, it’s this: surprises are expensive. Every hidden problem and unplanned repair eats away at your profits.
This is why experienced investors embrace the saying, “due diligence saves money.” The most successful buyers treat every inspection as a safeguard. They know that skipping steps in hopes of saving time or money often backfires.
Every deal comes with risk, but you can manage it with careful inspections and smart negotiations. Set your standards high, and don’t settle for uncertainty when you can have clarity.
“In real estate, surprises cost you.”
A little patience and planning today can protect your finances and future investments tomorrow
Every real estate deal brings promise and risk so protect your investment by making inspection reports a rule, not an exception. Know your costs, use your findings to negotiate, and treat surprises as the enemy of profit.
Never cut corners on inspections, as it’s your first line of defense in not getting ripped off. At PB Financial Group, we offer real estate investment loans to help you get started, but remember to always prioritize making a purchase that is smart, safe, and built to stand the test of time. Contact us at (877) 700-3703 for any questions you may have or visit www.CalHardMoney.com to learn more.
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Stay informed, and invest with confidence.
