Avery Carl [00:00:03]:
Hey, all. Welcome to the short term show special episode series on the Smoky Mountains in Tennessee. We are doing a ten episode deep dive into buying short term rentals in the Smoky Mountains. So we’re going to talk about a lot of things in these episodes. And we’ll probably be doing a quarterly update from here on out after we finish these ten. So make sure you hit that subscribe button so you get those delivered straight to your phone when they come out. We do have some supplemental materials for you in addition to the content on this podcast. So any information that you need on current property pricing, you can find on our website@theshorttermshop.com and we also have, courtesy of our friends over at Air DNA, current air DNA data for this market on our website as well.
Avery Carl [00:00:50]:
So you can check that out on the shorttermshop.com. and if you guys are interested in buying a property in the Smoky Mountains with a short term shop agent, you can email us at agents@theshorttermshop.com or if you just want to learn more about buying short term rentals in this market, you can join our Facebook group. We’ve created a 50,000 person community on Facebook all about investing in short term rentals. You can join that. It’s the same title as my book. It’s called short term rental, long term wealth. See you guys over there. Hey, guys.
Avery Carl [00:01:24]:
Today we have the episode on the contract process. So today we’re going to talk about everything from the process of making offers, getting under contract, getting your home inspection scheduled and things that you might run into there and appraisals, which we did cover a little bit in my financing episode, but we’ll talk a little bit more about that. Just everything contract related on this episode. So we’ve got a great panel here today. Some familiar faces and some new ones familiar can’t talk face that you have, or I guess, voice. Tim grillio. Tim, you want to say hey? Hey.
Tim Grillot [00:02:03]:
Good morning, everybody.
Avery Carl [00:02:05]:
Next we have Zeke. Zeke, do you want to introduce yourself?
Zeke Goodman [00:02:10]:
Yeah. How’s it going, guys?
Avery Carl [00:02:12]:
Zeke Goodman.
Zeke Goodman [00:02:14]:
That’s right.
Avery Carl [00:02:15]:
So tell us a little bit about yourself since you haven’t been on these before. Where do you own all that? Where do you obviously are? Smokey’s agent.
Zeke Goodman [00:02:21]:
I’m a agent in the Smokies. I own three cabins up here, but, yeah. So on the team for a while now.
Avery Carl [00:02:30]:
Yeah. And you were, what award did you win last year? Two years ago now.
Zeke Goodman [00:02:36]:
Rookie of the year.
Avery Carl [00:02:38]:
So rookie of the year at Exp. And so, Zeke, I didn’t even think about this. So Zeke was rookie of the year at all of EXp last year, two years ago now. And Tim was rookie of the year in the Great Smoky Mountains two years ago now, too. So these guys are very experienced. They do a lot of, a lot of deals. They’ve seen a lot of things. And new, another new face that you guys, I think we’ll be really interested to hear from is Mark Hunter.
Avery Carl [00:03:05]:
He is a home inspector in the Smokies. Mark, do you want to introduce yourself real quick?
Speaker D [00:03:10]:
Yeah, absolutely. I’m Mark Hunter. I own inside home inspection services. And good morning to everyone.
Avery Carl [00:03:17]:
Awesome. So we’re going to go. What we’re going to do here is we’re going to go through the process of writing a contract, getting it under contract, and just go through as if we are in the month long period of a transaction. So first things first. Say I’m an investor and I found a house that I want to make an offer on. I call my agent, Tim or Zeke, and I say, hey, I want to make an offer on this. So what’s, what’s the process there? And we can keep this kind of brief. Cause I wanna spend quite a bit of time on the inspection stuff, but, uh, we do need to cover this.
Avery Carl [00:03:52]:
And are there multiple offers? What happens in multiple offers? What happens. There’s not multiple offers. Just if I’m a client that’s called, you said, hey, I wanna make an offer on this. What’s the next step?
Tim Grillot [00:04:03]:
Yeah, I mean, really, we just jump in and start talking about, you know, what, what terms you’d like to get it at. You know, I always like to have a talk with the client on, like, look what’s gonna work for you. And then we can kind of go into strategy, because strategy is drastically different. You know, it’s not the same on every property. You know, I’ll be making some calls, the list agent, find out a little more detail. You know, has this thing been sitting on the market for 30 days and it might be a little overpriced or is it something that just popped up today, has a real aggressive price on it and has a good chance to get multiple offers? Because that’s going to drive a lot of what we’re going to do moving forward. But kind of the base fundamental I like to get said is like, look, you know, the most important thing is numbers, numbers, numbers. This has to work for you.
Tim Grillot [00:04:42]:
And it’s almost like talking to a lawyer. You tell me what number is like going to work for you and then from there we develop a strategy, you know?
Zeke Goodman [00:04:48]:
So, yeah, I think basically what Tim said, you know, you usually will reach out to the agent, find out, you know, how much interest the property has, if it’s multiple offers, if it’s been on the market for a minute, what kind of leverage we might be able to go into the offer with. You know, I think it’s going to be a basis by basis, you know, thing, depending on just how long the property’s been on the market.
Avery Carl [00:05:15]:
So let’s, let’s take a first. We’ll start with an example of a property that’s been on the market for three weeks, not multiple offers. Can I just throw out a low ball on that? My answer to that, especially now, is yes. And you can, in, in that scenario, look at what the numbers, what numbers work for you, at what price, and you can offer that. And sellers, at the time we’re doing this in 2023, some of them have not quite caught up with the fact that it’s not 2021 anymore and it’s not 100 offers on every single property. A lot of them are still kind of looking at their next door neighbor who got a zillion dollars for their one bedroom and thinking they can get that too. But I think as time goes on for this year, even they’ll start to come down to reality. But those ones that have higher days on market, I think are the best ways to find good deals because sellers are.
Avery Carl [00:06:10]:
The market has already told that seller, hey, your price is a little high. So I think that in terms of getting good deals that are on MLS, I would look at properties that have a higher amount of days on market. Another thing that is a favorite way of mine to find good on MLS deals are bad pictures. A lot of times agents get lazy about getting professional photos and making sure that they’re showcasing that property as best they can. I have gotten two really good deals because agents took just bad, like cell phone pictures, not even iPhone pictures. Blurry, don’t have pictures of every room. I got a really good deal in a different market down in Cape San Blas, Florida, at the height of the craziness in 2021, because the agent only posted three pictures of the house and they were all blurry and it was really a mess. Somebody was living there.
Avery Carl [00:07:06]:
They didn’t clean up for the photos. So it was second tier off the beach, no roads in between the house and the beach. So really just one more house in front of me and I was able to get it for $75,000 under ask because they had bad photos and all the other investors just scrolled right by it. But if you take that, if you took the time to open it up, you would see that it was built in 2019. So it was a brand new construction. Like, how bad could that really be, buying it in 2021? So that’s a really great way to get deals. I’ve seen one. There was one in the smokies on.
Avery Carl [00:07:41]:
There’s a street called Windswept that several of our agents have owned on over the course of the last few years. And it has some of the best views in the entire smoky mountains. The road is straight up, so you have to deal with that, but has some of the best views ever. And there was one property that was on the market for a long time, and it only had a picture of the front door with the address on it. And you could just kind of see the front door and part of the front porch and part of the roof, and there was nothing else. And I knew, man, that street has, like, the best views in the smokies. I’m going to go look at this. And it was totally cute.
Avery Carl [00:08:13]:
Was a totally cute cabin, but it sat forever because of bad photos. So that’s always guys, as investors always click into the listing and scroll through and don’t dismiss something because the photos are bad, because you can really find a great deal doing that. What else about the beginning of the contract process do we need to discuss? So we’ve made an offer. Now we’ve sent it to the seller. How long do they typically have to get back to us with some kind of a response?
Zeke Goodman [00:08:43]:
Usually you can set the offer. I think right now, with the way the market is, I’ve been doing pretty quick responses, you know, just because things don’t have multiple offers most of the time. So, you know, I’ll try to do 12 hours or so and let the agent know.
Avery Carl [00:09:02]:
I would hate you as a listing agent.
Zeke Goodman [00:09:05]:
I mean, like, if your property’s been sitting on the market for 60 days or whatever, you know, I’m bringing you an offer. You know, in my opinion, I think, like, a timely response is not too much to ask.
Tim Grillot [00:09:18]:
I completely agree. And, you know, I’ll add, you know, it goes back to that strategy we talked about, you know, with all the different variables, anywhere from the low end all the way up to 48 would be pretty long for cookies, in my opinion.
Avery Carl [00:09:35]:
Yeah, yeah. When I was doing transaction, I usually transactions, I usually did 24 hours. But, man, you guys are. You guys are the ones that are getting the deals for people. So I’m going to listen to you.
Zeke Goodman [00:09:48]:
I usually try to give a heads up before I send in a short notice. I’ll just say, hey, they’re kind of wanting an answer today. Is that okay with you guys?
Avery Carl [00:09:57]:
Awesome. All right, next step in a contract. So say they accept your offer or they counterback and you guys come to terms. Well, let’s talk about terms of the offer. So, you know, maybe you’re asking for a 10% discount. How much earnest money is typical? What’s the typical? Inspection period? All that and the typical contingencies. Cause there’s only two, two contingencies in the Tennessee contract. So let’s go over that stuff.
Speaker D [00:10:22]:
Yeah.
Tim Grillot [00:10:23]:
So earnest money, you know, again, that’s something that we can totally set, but kind of, I’ll say typical is around 1%, kind of what I’ve seen in smokies. So somewhere in that range is what would be kind of considered somewhat normal. And then as far as inspection period, I always usually start with around 14 days. Again, that’s something that can fall into strategy a little bit if you’re in a multiple offer thing, sometimes doing that shorter can be appealing, but kind of ten to 14 days is pretty normal during slow season. Sometimes people like to see ten because it’s quicker to get the inspector in there. The one thing with the period is you got to know that you’re going to have to work around, potentially have to work around guests to get the inspector in there. So sometimes it might be four or five days before an inspector can even get in there if you’re waiting for a turn. So.
Zeke Goodman [00:11:13]:
Yeah, I mean, same thing Tim said. I know that sometimes the properties are vacant. I’ll do a shorter inspection period, you know, but 14 days is typical. 1% on the earnest money is pretty typical as well. But those terms are negotiable.
Tim Grillot [00:11:29]:
So, yeah, the inspection period, too. The way that works is you basically have 14 or whatever your inspection period is. Let’s say it’s 14 days. You have 14 days to get the inspection done, review the inspection, and provide whatever your ask is going to be. Now, you can always do extensions and stuff that’s kind of outside of this, but let’s just say we don’t do an extension. You have 14 days to get to put in your request if there’s any repairs that you want to get done or ask for any concessions and lieu of repairs or whatever. Once you put in that request, then you actually transition to what’s called resolution period here in Tennessee, and that’s another time period. That we get to pick, I generally use around five days for that.
Tim Grillot [00:12:09]:
And that’s the amount of time, basically, once you. Once you put in that request, your inspection period technically ends and you turn in, you’re transitioning into the resolution period, and you have that number of days to come to resolution. So you have to basically negotiate during that time with the seller. And so during that time period is kind of what you come to terms on. The reality is, when it comes to the repairs, the seller is nothing on the hook for them just because it needs it. You know, it is a negotiation. It is kind of two sided. You know, they.
Tim Grillot [00:12:41]:
You have the right to, you know, ultimately, if there’s bad enough things, you know, if it’s something like bad foundation problem, you can terminate the contract so the seller does have some motivation to work with you so that the contract doesn’t fall out.
Avery Carl [00:12:52]:
So, yeah, so let’s talk about the inspection contingency. Contingency really quick. Sorry, guys. I’m still, like, a little congested. So there are. You talked about the inspection period, and you talked about the resolution period. So, guys, this is very, very important when you’re under contract on something in Tennessee, if you miss the inspection period. So if you get your inspection back and that whole 14 days passes and you have not sent a formal repair proposal.
Avery Carl [00:13:25]:
It’s a proposal. It is not a binding agreement. It’s not an amendment. But if you haven’t sent your repair proposal of what you’re asking for by those 14 days, then you are automatically, automatically by the contract accepting the property as is. So keep that in mind once you enter the resolution period. This is a bigger one. Once you’ve submitted your proposal, you enter into your resolution period, which is typically five days. If you screw up the resolution period and don’t send an amendment or come to an agreement by that fifth day, then the contract automatically terminates.
Avery Carl [00:14:00]:
So you have to keep that in mind and know the difference between the inspection period. If you miss that, it means you’re accepting it as is resolution period. If you miss that, then the contract is dead, and then you have usually an earnest money dispute there. So, guys, am I saying any of that wrong? Have you seen any of that be different lately?
Zeke Goodman [00:14:21]:
No. That’s right.
Avery Carl [00:14:23]:
Yes. And also, uh, on either side of the deal, whether you’re the buyer or the seller, just straight up not responding in order to pass that deadline. Like, if you’re trying to force the other party out of the contract, um, is not something that I recommend doing. I’m not an attorney by any means. But I have seen attorneys get involved on stuff like that. So you do have to what’s called negotiate in good faith. So if you just say, like, you know what, I changed my mind. I don’t want to buy this.
Avery Carl [00:14:54]:
And you ghost on the entire deal and you’re not responding. Uh, you. You can be liable for. For some things there. So just make sure you’re always negotiating in good faith. Uh, terminating during the inspection period. You know, anything on that inspection or anything related to your due diligence, like, you, you can terminate on. Um, it does.
Avery Carl [00:15:13]:
It is called an inspection period for a reason. Inspection contingency in a reason? For a reason. Sorry. So you know something that you can’t do that we. That we can’t really send to the listing side is you can’t say, oh, you know what? The numbers don’t work for me anymore. I’m going to terminate on the inspection. You do have to use something from the inspection to terminate. So I just want to.
Avery Carl [00:15:34]:
Other states do have what’s called a due diligence contingency where you can terminate for that. You can terminate for whatever you want. But in Tennessee, it’s inspection only. So I just wanted to clarify that in terms of. So we’ve, we’ve talked about one contingency of the contracts. So there are two contingencies of Tennessee contracts. One is inspection. The other is financing.
Avery Carl [00:15:56]:
So let’s talk about that financing contingency, because I think that some people will. I’ll let the agents respond to this. So let’s talk about the financing contingency. What do you guys say?
Zeke Goodman [00:16:09]:
Yeah, I think with the financing contingency, obviously some of that falls on the lenders hands, you know, making sure that the client is pre qualified and doing their due diligence before handing them a pre approval letter. And, you know, it can get a little gray, too. Like if your client goes and buys a brand new suv in the middle of the contract, and now they don’t qualify for the loan, you know, are they acting in good faith? So the financing contingency, I think, really only comes into play when the lender kind of makes a mistake, in my opinion.
Avery Carl [00:16:49]:
Yeah, I would say that if there are some things that are unavoidable, like if somebody goes and buys a car in the middle of a contract or something, or they don’t report everything to the lender upfront, and they only find it in underwriting that. That there’s something related to their debt to income ratio or something like that. But in order to terminate using the financing contingency. You do have to have a denial letter from your lender. Tim, did you have something you wanted to add?
Tim Grillot [00:17:20]:
No, you pretty much nailed exactly what I was going to say there. So there are rare instances where something might come up with the property that the lender doesn’t like, or there’s certain DSCR lenders that won’t do true log homes, or they get weird about that, and in that case, they will give you a denial letter because of that. But sometimes you can try and switch lenders. There’s other options you want to try before you terminate. Obviously, just like Avery said, you have to have a denial letter to use the financing contingency.
Zeke Goodman [00:17:52]:
And I’ve seen, I’ve had lenders change the requirements, you know, midway through. Like, they start off with 20% down and they change the requirements to 25. And now your client no longer qualifies for the loan.
Tim Grillot [00:18:03]:
And that’s also in the contract, you know, that gets spelled out. And that’s why it’s important to get that as accurate as possible. You know, we put in the contract that, you know, the contingency is tied to the buyer being able to do a 20% down. So if the lender were to change it, that is what gives you the out, you know, and that, that’s what drives that denial.
Avery Carl [00:18:22]:
And I would say, guys, the number one thing that causes a property to terminate on the financing contingency is a low appraisal. So just because a property appraises low does not mean that you can’t continue with the deal and that you can’t get financing on it. It just means that the lender will not lend past the number that’s on that appraisal. So if you’re under contract for 500 and the appraisal comes back at 490, you can still move forward, but you’re just going to have to bring that extra 10,000 in cash. So that can, you know, you have to decide deal by deal if. If adding that extra 10,000 is going to make a difference to you and what’s, what your goals are. So if your goals are a high cash on cash return, that extra ten can really mess with that. But if your goals are more cash flow based, then it might not be as big of a deal.
Avery Carl [00:19:13]:
In, um, in 2021, every property, in order to, to get even your offer considered, you had to have, you had to offer over asking with an appraisal gap. And what that means is that you’re guaranteeing that up to a certain amount if it appraises under that, you will bring that extra in cash. And it’s not black and white either. So if it appraises 10,000 under, that doesn’t necessarily mean you have to bring 10,000. You can negotiate with the seller, see if they’ll meet you in the middle. Sometimes they’ll drop a that the purchase price to meet the appraisal. Now, we haven’t seen that in a few years because it’s been really crazy, but it’s getting back to the point where sellers will do that in order to get the deal done because there’s not 1000 people waiting in line to come buy the property for over asking anyway. So low appraisal is not the end of the world.
Avery Carl [00:20:04]:
There’s still a way to negotiate and see if you guys might be able to meet in the middle or if they’ll come down or if theyre asking you to bring all that cash extra. Were not seeing as much of the buyers having to cover that anymore. Do you guys have anything else to add to low appraisals?
Tim Grillot [00:20:21]:
Robert, ill say right now and note that its February 2023. But in todays market, ive actually had a couple that they have come down to appraisal price. So weve actually gotten started off kind of getting a good deal, and it might have appraised a little low, 510, 15 grand or whatever. And theyve got actually a better deal because the seller did come down because there wasn’t a line of people exactly what you said, you know, like, you know, 2021, 2022, that was pretty rare. You know, they would just say either going to pay it or the next person online is getting this thing. So, but it’s a little different right now. And that, that’s just going to shift with the market. And that’s just another thing to, you know, kind of know where you are in the market.
Avery Carl [00:20:59]:
Yeah.
Zeke Goodman [00:21:00]:
I’d like to add to is a lot of times, like if appraisal comes in low and you’ve negotiated sellers concessions during the inspection period, a lot of times the sellers will try to go after those credits in order to make up for them dropping the purchase price down. I’ve had that happen several times as well.
Tim Grillot [00:21:17]:
Great point. Same thing. Once you owe, anytime you open the door for negotiating, everything you’ve negotiated before is, you know, comes up or it can come up.
Avery Carl [00:21:25]:
So, yeah, yeah. And if they’ve given you already given you a lot of concessions, then a lot of times they will say, well, yeah, I’ll drop the price, but we’re going to knock out some of these concessions. I can’t do both. So it’s all a negotiation. And one more thing that I wanted to hit on before we move on is especially we’re not in a situation like this right now, but we could be again in the future. But we were in 2021 making offers with no contingencies versus making as is offers. So those are two different things. But a lot of people think they’re the same thing.
Avery Carl [00:22:01]:
So if you’re making an offer on something as is, you still have your inspection contingency, and you can get that inspection done. And if it’s crazy, you can still terminate the contract if you don’t like what’s on the inspection. So that’s as is. So you’re not waving your inspection contingency, you’re keeping it, but you’re just saying upfront, hey, guys, I’m getting my inspection. I still have the right to terminate based on the inspection, but I’m not going to ask you to repair anything, and I’m not going to ask you for any money on the back end. An offering with no contingencies whatsoever means you are not even getting an inspection. You are taking that property even if it’s falling down the mountain. And you don’t know anybody who says falling down the mountain, by the way, that’s a rookie move.
Avery Carl [00:22:45]:
Don’t say falling down the mountain, but anybody who ever says a house is falling down the mountain is new. So as is versus no contingencies, always go as is. Don’t go no contingencies unless you are really, really, really sure and you know exactly what you’re doing and you have experience in that market. Because no contingencies means that if you find something wrong with the property during your final walkthrough, then no, you’re. You still have to buy it. So just keep that in mind. If you have to make a competitive offer, always go as is rather than no contingencies. Um, because no contingencies means no financing.
Avery Carl [00:23:23]:
Contingency also. So if you get a loan denial or something like that, that means you’re having to pay cash. So, uh, we did see quite a bit of that in 2021, I would not recommend it ever, unless you are really, really experienced. I don’t like that. I won’t even go, no contingencies unless, I mean, maybe I would in certain instances, but, like, I don’t like that for. Especially for new investors at all. Okay, that was a soapbox. Anybody have anything else before we move on to.
Tim Grillot [00:23:52]:
Nailed it. Nailed it. That’s all I can say.
Avery Carl [00:23:54]:
Okay, well, do we need to? Actually, let’s talk about closing dates really quick. Let’s close the contract loop before we start talking about inspections with Mark so your close date things can happen and it will have to get moved back. There are a few things that are really common when it comes to closing dates having to be pushed back. Most of the time it’s related to lending. There is a rule called the trid rule. I don’t remember what trid stands for, but once the lender issues you a CD, which is your closing disclosure, we have to have three days between that CD and closing. So if they get that CD out two days before closing, we have to push closing back. And what we saw in 2021 when everything was crazy was sellers not agreeing to do that and terminating the contract.
Avery Carl [00:24:43]:
Or actually, that’s another point I want to make. In Tennessee, sellers cannot terminate a contract. They can refuse to negotiate so that buyers terminate contracts. But a seller can’t say, I’m terminating this contract. They can just be really difficult to deal with. So keep that in mind. But they can not agree to sign an extension which would force you to terminate. We don’t see that as much anymore.
Avery Carl [00:25:05]:
But that’s a main one to watch out for is that three day tread rule. Sometimes there can be title issues that will pop up at the last minute. You also, again, can’t just ghost to in order to make the contract, pass the deadline and then expect to get your earnest money back. You do, again, have to operate in good faith. You can’t just decide you don’t want to buy it and say, hey, I’m not going to sign, I’m not going to sign the closing docs. That’s a good way to at best, lose your earnest money and at worst get sued. I haven’t seen anyone get sued over it yet, but I don’t want it to be you. So I’m just kind of telling you guys about that.
Avery Carl [00:25:44]:
I have seen in the past, in the recent past, a seller decide close to the end of a contract that they don’t want to do the repairs that they agreed to, and the listing agent just refused to answer their phone for the last day before of the contract and then said, oh, sorry, the contract’s dead, we’re not selling it to you. And then attorneys had to get involved. You can’t do that, guys. So if you see that happening, that’s an attorney thing. You do have to operate in good faith at all times. You can’t just not answer the phone and pretend that the contract doesn’t exist. You can, but there will be repercussions for that from the other side of the deal. Do you all have anything you want to add to that or any anecdotes or anything?
Tim Grillot [00:26:26]:
I’m just going to add, you kind of talked about, like, people can be a pain to deal with and not extend or not do this, and I do that. Keep, I always tell my clients, you got to keep in mind through this whole negotiating process. We have several points of negotiation through here, and if you get really, really hard to deal with during one and then you need something later, it can come back to bite you. So you just got to, you know, act like a good human through the whole thing, you know, I mean, it’s fine to negotiate. We want to negotiate. We want to get you the best deal possible. But just remember, if you get really, really hung up and difficult on one certain thing and then come time for either an extension or an appraisal issue or something like that later down the road, then the tables can turn.
Avery Carl [00:27:04]:
So I’ve seen that happen a number of times. All right, so we’ve gone over kind of the contract process from beginning to end. Let’s talk about some of the things that people have the most trouble with that we want to be able to shed the most light on. And one of those things is your home inspection. So we have a very well known home inspector on this call today that is going to help us talk through this. So people can get really scared when it comes to home inspections. They can get, you know, they don’t necessarily have a lot of context. So if you haven’t bought like four or five, six deals in the smokies, you might not understand that some things are normal, some things are a big deal.
Avery Carl [00:27:49]:
So, Mark, can you, let’s start out. Can you tell me, like a few things that show up that are really common to show up on home inspections in the smokies?
Speaker D [00:27:58]:
You know, I had that question come up yesterday. Probably the most common question, and what everybody wants to see on the report is water related gutter diversion, water running around the foundation, wood to soil contact. Almost the most important items are water related. And it’s funny that you said about the cabin sliding over the hill. When people call us from out of town, they’re like, you know, we’ve never been there before. We’re in Arizona. You know, do these cabins just fall over the hill? There’s so many mountains. And instead of sliding over the hill, we just say they’re horizontally displaced.
Speaker D [00:28:34]:
But usually it’s just foundation and water issues that pop up that everybody freaks out over. And most of the time, it’s a simple correction of digging a ditch, cleaning a gutter, or adding a gutter downspout. So I would say water related would probably be our number one question and concern that pops up for sure.
Avery Carl [00:28:52]:
All right, so water related. So do how much? And I’m not looking for an exact answer here.
Speaker D [00:29:00]:
Sure.
Avery Carl [00:29:01]:
What percentage of properties in the smokies actually have gutters on them?
Speaker D [00:29:05]:
You know, it’s very rare. And here’s what happens. The reason most gutters aren’t on there is somebody has to clean them. So it’s a pretty low amount of guttering that’s been installed. So if you don’t install gutters, you know, there’s the option of putting some sort of like what you would see on a lake bed, just put some rocks around the base where the water runs off. That creates a great diversion, and then you don’t need the gutters. Or if you do have gutters, just keep them clean. Because I tell people, hey, if you have gutters and they’re not cleaned, it’s kind of the same thing as not having gutters.
Speaker D [00:29:36]:
So pretty much the same principle. Just if you have gutters, keep them clean, keep the downspouts diverted five or 6ft away from the foundation, and you’ll just be surprised how many problems you don’t have. It just eliminates erosion. It eliminates all those little ditches that you see around the front, the moisture penetration to the crawl space in the basement, where we write up efflorescence. And efflorescence is the white powder, the calcification that you see pressed through the block walls. So keeping the water away from it gets rid of those things where you see microbial growth pop up. So it’s amazing what a gutter or proper diversion can do because everybody freaks out. Now, the problem is a home inspector that we have is all of the pest control companies now are incentivized by.
Speaker D [00:30:22]:
They’re giving those guys huge amounts of kickbacks to go inside of a crawl space whenever they’re supposed to be doing pest control. And, hey, there’s no insulation here. You’ve got mold everywhere. And, you know, they’re getting huge kickbacks on trying to find that stuff. So to eliminate that series of problems, I may look at it because I’m a licensed mold assessor. I can actually speak about it because I’m licensed to do it. May not be anything serious. That just pops up.
Speaker D [00:30:47]:
You have some elevated moisture, whereas a pest control company is going to come in and just completely terrorize the whole situation. So to avoid that entire process, just keep the water kicked away from the house, keep your gutters clean if you have them. And the whole, the whole goal is just to divert water away from the structure.
Avery Carl [00:31:08]:
So you’re saying you mentioned mold, which I almost didn’t have on my list, so I’m glad you mentioned it. So is all mold, like, black mold? We need to rip this house down and, like, never come over here ever again? Or is, is it able, are some types of mold, like, not a big deal and it’s just a quick spray?
Speaker D [00:31:28]:
So, yes, that’s a great question, too. And we get asked that a lot. A lot of people look at the color of mold. For example, you go into crawl space and you see a dark brown black. All of the clients, they just automatically flip out and say, oh, my God, there’s black mold everywhere. Well, that’s not the case. The color of the mold doesn’t dictate the type. For example, black mold, the technical name is called stachybotrys.
Speaker D [00:31:51]:
So Stachybotrys is kind of a slimy mold that is hazardous, that needs to be addressed. It needs to be remediated. Most molds we see in the crawl space scenarios, whenever they say active fungus microbial growth is more of penicillium aspergillus type mold that you see due to elevated humidity levels. Maybe you’ve got that little bit of water in, maybe you have a condensation drain. But another thing that people overlook that causes this is a lot of the cabins, they don’t divert the dryer vent to the exterior. So you’ve got the dryer pumping this humid air. So a lot of times, hey, guys, we can eliminate this whole thing, just extend that dryer vent to the exterior. And so when we see that, and I’m keeping it short because we could talk for hours on it.
Speaker D [00:32:38]:
So, no, not every mold is going to affect you physically in a negative way. We can definitely remediate by the dryer vent, like I mentioned, keeping the area dry. And then also, you know, you don’t have to tear the house down there. There are sprays. You never want to use bleach. So let’s, let’s clarify that bleach actually will promote the growth of mold. It has a hot, yeah, it has a high water content. So it literally does to the mold exactly what it says in the title, bleach.
Speaker D [00:33:10]:
It pulls the pigmentation out of the mold that makes it appear dead and look white. Then it comes back in a couple months. So you want to get an approved product, but a lot of times it’s just a manual abrasion, scrub down, spraying of a good product to get rid of it, and you’re on your way. Now, yes, there are scenarios where somebody has completely neglected, you have a roof leak or something that rotted an entire wall out. But if you fix the wall, you’re kind of getting rid of all the problem together. So, yeah, the worst case scenario, you’re getting rid of the mold when you actually do the repair.
Avery Carl [00:33:43]:
Gotcha.
Speaker D [00:33:43]:
That’s sort of a short story. So, no, you’re going to see mold on everything. Anything that has wood, any type of an organic matter. Just remember, mold feeds off of starches. And it’s just like a human. It has to eat, drink, breathe. And as long as you’re providing a food source, it’s just going to flourish a little bit. So eliminate one of the three, try to kill it out and catch it before it gets too bad.
Speaker D [00:34:06]:
But no, so many people run away without asking. Tennessee is not a state that requires any type of certification. So as of right now, us having this conversation, all three of you guys are licensed mold inspectors. You can tell everybody what you want. It’s a huge money maker and believe me, they’re capitalizing on that. They scare everybody to death without doing any lab testing and any further knowledge and just say, hey, this place is covered with mold. Give us $50,000 or never come in. It’s going to kill you.
Speaker D [00:34:37]:
When by the same token, most of it’s a fairly easy fix.
Tim Grillot [00:34:41]:
That’s fantastic information.
Avery Carl [00:34:43]:
Good to know.
Speaker D [00:34:43]:
Yeah, yeah, yeah. It’s great. And check out my website, airhealthglobal.com dot. I have a lot of valuable information that breaks down what we do, how we take care of mold. And another thing, if you talk to somebody that tests for mold and remediates mold, stay away from them. You don’t proofread your own work. We go in, we find it, then we advise you, and then you find a company, and then we make sure they did it the right way. Florida, Texas, Washington, Louisiana and California are the only five states that require any type of certification in the US.
Speaker D [00:35:17]:
And believe me, these guys are running with it. They are just running around terrorizing Tennessee and scaring everybody to death. When a lot of times it’s just a simple remediation. Sometimes it’s additional ventilation. So just keep an eye on that.
Avery Carl [00:35:32]:
Well, that was a wealth of information. Thank you. All right, so let’s talk about some, some other things that are not water related that show up on, on a lot of home inspections, like maybe related to decks or the exterior of the house.
Speaker D [00:35:46]:
Yeah, we can kind of walk around. So first thing we do, I pull up to a house, we check everything out, look at it from a visual, you know, from the front of the house, see what’s going on, see if it looks like it’s sliding over the hill. But then we go around to the deck. Obviously, joist hangers are probably one of the most crazy, scary things that people flip out about. That’s not that difficult. So a joist hanger is just a piece of metal that basically holds the joist to the outer band of a deck. And over the years since a lot of these cabins have been built, the insurance companies and some code enforcement, to a point, have required that those be on there if you don’t have any, and we recommend it. Most Joyce hangers range from eighty nine cents to three dollars.
Speaker D [00:36:32]:
You know, you just have to basically put them up into place and put them in with the proper fastener and off you go. So when we discover that there aren’t any joist hangers, we just kind of make a note like, hey, are you going to have 50 people over that are going to be partying and jumping on this deck? You know, if you put these joist hangers on there, it’s kind of just going to give you an extra peace of mind. And also maybe your insurance agent’s going to catch it or maybe it’s a code violation in the particular area that you’re located in. So we just kind of throw it out. And it’s funny, I had this conversation also yesterday. When I’m doing an inspection, I always tell people we’re looking for alligators and every now and then there’s a squirrel where you have to report on. And so we kind of consider the joist hanger of the squirrel. It’s like we’re going around the house is structurally sound.
Speaker D [00:37:22]:
Nothing’s jumping out, biting us. The house looks safe. But hey, we see the squirrel. Look, you don’t have joist hangers at some point, put those on there. And also I’m seeing, depending on the type of financing, if they’re doing va, fha, USDA, anything like that. The appraiser also looks at that a little bit differently. He may call those out, whereas a cash or a conventional loan, they just kind of bypass them and don’t even pay any attention to it. So those are definitely probably the most common items.
Speaker D [00:37:53]:
We see the flashing between the deck and the house. If there’s a situation where there’s some wood rot, we’ll bring that up. The bolting attachment of the deck to the house. We like to see a bolt. The reason we like to see a bolt is because nailing can deteriorate and cause some insecure spots. So all of those things can generally be done within a day’s time of repair if the person chooses to go ahead and do those. So, yes, we put them in the report. Yes, we recommend they should be done.
Speaker D [00:38:24]:
Should you run away from it because of that? No. I actually had a lady call me last week. She goes, I have to get rid of this property. We don’t have joist hangers. And I said, well, first of all, do you understand what you just told me? She said, well, there’s no joist hangers. I said, well, what do joist hangers do? She goes, I don’t know, but it sounds scary. So literally nobody talked to her about what that scenario was. So we kind of pushed her through it, told her exactly what it did.
Speaker D [00:38:49]:
I shot her some little diagrams, and she was like, well, this is no big deal. And I’m like, yeah, you should have paid attention to, like, the hole in the roof. But, yeah, that’s pretty much the most common thing that we see. The water, the joist hangers, the bolting on the exterior of the house, for sure. And, you know, the obvious things. We’re looking at the roof to make sure that it’s okay. There aren’t any huge holes where the wood boring bees and the woodpeckers have gone through and just make general recommendations for repair on that. So that is pretty much what we see on the exterior inspection.
Speaker D [00:39:23]:
That would stand out.
Avery Carl [00:39:25]:
All right. And is there anything that you see a lot on interior inspections that maybe they’re not a huge deal that a lot of people might mistakenly think are, you know, deal breakers?
Speaker D [00:39:39]:
Yeah, there are a couple things, and I’m actually writing up some issues, especially in Gatlinburg, Sevierville area, for example. Let’s start with a water heater. If a water heater is installed in a house, technically it’s supposed to have an electrical disconnect. If it’s an electric water heater within a few feet or site of the water heater, the builders will argue, fight, and they get just entirely mad at me for even bringing it up. They said, it’s not required. All code does require. It’s such a simple thing, too. It’s like it’s not even worth arguing.
Speaker D [00:40:12]:
It’s the little gray box that goes close to a water heater that if you’re working on that water heater, you disconnect it so you can service it without being shocked. It’s really simple. But the reason we write it up is the appraisers call that out continuously. So after the appraiser calls it out, then they call us and say, hey, you know, our appraiser called it. This is something you should have known. So we sort of go in a battle if we don’t see an electrical disconnect, which most of the times we don’t, especially on new cabins, we call that out. We call out the extension on the water heater. It’s the little tube that costs $4 that screws in, that goes to three to four inches off the ground.
Speaker D [00:40:53]:
That’s also an item that the appraisers call out. They seem so simple and everybody thinks we’re being picky, but I have to do an inspection as though another inspector is coming behind me or an appraiser. So we try to point out those things. Ground fault receptacles, you’re supposed to have safety protection within 6ft of a water source. So in the kitchen, the bathrooms, the exterior, the laundry rooms, you need to see some sort of ground fault protection. That’s pretty much the common interior findings. You know, inoperable fireplaces that are either disconnected or not in service. But generally the interior, pretty simple, straightforward.
Speaker D [00:41:33]:
Some people flip out over cosmetic stuff. You know, they see the black stains on the wall that they think, you know, the whole cabin’s rotted because they see the staining. But generally that staining is from the building process where, you know, you’ve had some moisture come down, wash the black in off the roof coverings. Yes, it can be moisture entry, but most of the time we see a situation where it’s just dry, old stains. And with that said, we check it with, you know, moisture meter to make sure we confirm that. Hey, you see that stain? It’s there, but it’s okay. It’s dry. And we really don’t see any entry points.
Speaker D [00:42:08]:
You know, that’s anything active. That’s basically what we’re looking for. Just making sure nothing’s active.
Avery Carl [00:42:14]:
All right, let’s talk about the word, the phrase. This is a big one. End of useful life on. On appliances. What does that mean?
Speaker D [00:42:26]:
So, on appliances, I never use that term. And I actually have a special blurb in my report, when we check appliances, they work or they don’t. I did one yesterday. They had, if you guys are with me on Facebook, I put it, for example, it was a stove, refrigerator and oven all in one unit in a kitchen. It was made in 1978. We turn it on, it heats up, it works. I don’t use the end of its useful life. If your refrigerator is making noise, I’ll say, hey, the refrigerator pump is making excessive noise at time of inspection, but is operating.
Speaker D [00:43:01]:
Recommend further evaluation. So I really don’t get into the age. We use that comment more on a roof. That’s really the only place that I use that as far as ending the, you know, it’s useful life would be a roof that has missing shingles, a lot of granule loss, hail damage, you know, literally what it sounds like. Yeah, this thing’s not going to last a whole lot longer under normal conditions. But as far as appliances inside, they work or they don’t. And that’s really as far as I go with appliances on the inside of just verifying proper operation.
Avery Carl [00:43:35]:
Okay, awesome. And let’s talk about now things being up to code. So a lot of we’ll see this with like deck railings and things like that where it’s called out that it’s not up to code. Are sellers required to make those things up to current building codes during a contract?
Speaker D [00:43:57]:
Something that will surprise you? As an inspector, we are not allowed to even cite code. Technically, if you wanted to. If I did a report that said Dec is out of code, I can be sued for that because I’m not code enforcement and codes change, but the home inspection process is based on a series of code and just building standards. So when I look at a deck and I make a recommendation is probably based off of a code, but we cannot enforce code, we cannot quote code. And as far as the seller goes, a seller doesn’t have to do anything. You know, a buyer can ask for it. So if someone is specific about code, they have to contact the local municipality, local code enforcement, and go over that with them. But we cannot cite code.
Speaker D [00:44:49]:
We basically are looking for something that’s a safety hazard, but are not allowed to even get involved in it.
Avery Carl [00:44:55]:
Oh, I didn’t know that because I’ve seen a lot of inspection reports that say X, Y and Z is not up to code, but sellers don’t have to bring something up to current building code. Yeah.
Tim Grillot [00:45:08]:
So I’d like to add to that too. On the agent side, it’s actually in the contract that you can’t, you know, in Tennessee, the buyer basically waives the right to ask for anything of cosmetic nature or code related. So, you know, if something was built before the code changed, we’re not allowed to ask for it to be brought up to current codes?
Speaker D [00:45:29]:
That is correct.
Avery Carl [00:45:30]:
First, let’s talk about what is included in a typical home inspection. If somebody calls you or any home inspector in the smokies, what. What does that include? What do you inspect because, and what items does a buyer need to contact a vendor specific to that, like a well inspection, for example.
Speaker D [00:45:53]:
Now we’re going to be sharing all of my secrets with my competition.
Avery Carl [00:45:56]:
Well, don’t do that.
Speaker D [00:45:58]:
I’m joking.
Avery Carl [00:45:59]:
What’s typical?
Speaker D [00:46:00]:
Okay, so a standard home inspection, you know, if Joe Smith calls me, says, hey, we need a buyer’s inspection that’s going to cover everything from the roof to the foundation and is literally a snapshot of what we see. So many people think that we go in and move appliances, tear down walls, open up closets. It’s a visual inspection. So when we show up for the general inspection, it covers the roof, the plumbing, the electrical, the appliances. Some cosmetic items are mentioned, but I have a really huge blurb about cosmetics because everybody has their own opinion of what they want to see. So it’s all of the major components. If you need a well inspection, like you mentioned, we do that. We do a.
Speaker D [00:46:45]:
There are a couple different well scenarios. A lot of times a buyer just needs a bacteria. Is the water safe to drink? So we do a coliform E. Coli test with the lab. So we provide that service. We’re starting to see more of a technical client that are coming that want to know gallons per minute. So that’s called a draw test. So if they want to know what a draw test is, which is basically, well production, we also do that.
Speaker D [00:47:10]:
So there’s two separate tests. A lot of people say, hey, we want to know draw. We want to know volume. We want to know quality of water. We want the pump service. We want filters change. So we can provide all of those services, but the most common is the bacteria. Hey, grab a water sample.
Speaker D [00:47:25]:
Let’s make sure it’s safe to drink. I generally tell them if they want to save the money on the draw test, just take a look at the reviews, because if it’s an active cabin, if it’s an active rental, if it’s been on the market for a long time and it’s not producing water, there’s going to be a complaint somewhere. So kind of just follow that if you see that there was a complaint, take a look at that. You know, and a lot of times we run into cabins like, hey, we ran out of hot water, or, hey, we ran out of water, period. Or the water was a little bit muddy. So I think as a buyer, read those reviews, see what it says. Those sort of things pop up and it saves you anywhere from five to 1200 bucks for a well production test. We also do the termite inspection.
Speaker D [00:48:05]:
We do that at the time of the home inspection. Most of the time that’s required. We take care of the sewer as well. And that’s another multiple facet inspection. I like the sewer scope. The sewer scope is the inspection from the house through the lateral line to the septic tank. We’re kind of making sure everything’s connected. We’re making sure it’s clear there aren’t any root growths or, you know, Tonka trucks that the kids flush down the toilet, making sure everything’s flowing properly.
Speaker D [00:48:33]:
And then we have the septic pump out. You know, we can get a. Depending on where we are, we can get the truck up and, you know, pump the tank out as well. A lot of people want to start off with a fresh start on that. So we do provide the septic service. Radon is starting to pop up a lot. Radon. So many people.
Speaker D [00:48:54]:
The best thing to say, a lot of people think it’s a scam. A lot of people think, if you mention it, that you’re trying to upsell them. You know, it’s one of those things. If someone asks, we bring it up. Radon is real, but in most cabins, we have a crawl space. And if you. If you follow the trail of money, the inspectors that really push Radon hard are somehow attached to a mitigation company, so it’s not uncommon to see that. So if asked, yes, we do Radon.
Speaker D [00:49:22]:
So we do provide that service as well. But generally, if there’s a crawl space and it’s properly vented, we rarely see elevated radon levels with a crawl space. If you have a basement or a slab, we do see elevated levels with that. So those are probably the main services that we. That we provide over there. And we can do pretty much anything. We have drone service for the roof. We can do pictures over top for the cab, you know, for the clients and send those out, but those are the main services that we cover.
Avery Carl [00:49:58]:
So what exactly would you say a buyer needs to get? Like, when do they bring in a. Well inspector and like, a septic company? I didn’t know you did septic stuff. So you may have a septic company. I don’t know that.
Speaker D [00:50:11]:
Yeah, we do.
Avery Carl [00:50:11]:
So what? Oh, I had no idea. So at what point would they need to bring in like a well inspector? And what’s the difference? What does a well inspector inspect? I. Because I. I think there’s some confusion on that.
Speaker D [00:50:25]:
So whenever we do the home inspection, we’re automatically checking the function of the well at no additional cost. So when we come in and we turn on multiple fixtures, the bathtub, the sink, the hot tub, and we’re filling everything up, we’re kind of watching that, seeing if the pressures are okay, seeing if, you know, if we turn on the kitchen sink and then the shower turns off, we know that there’s probably a pressure problem or lack of water. Or if we turn on all of those fixtures and we run out of water, then that would be a situation where we say, hey, you probably need to look further. Let’s have the guy come out, pull the pump out, take a look at the shaft, because, you know, some of those wells are, you know, anywhere from 50 to 300ft deep. So that does require a truck to pull those out. So. And I do see where it’s confusing because we are checking the production, the quality of water. We’re looking for smells, we’re making sure that everything functions properly.
Speaker D [00:51:20]:
The blue tank, the pressure tank that’s in the house, we’re looking at all that. So if we see anything going on with that, we recommend further evaluation if we’re having a problem during the main inspection. Also, when we get there, we don’t know if that particular cabin is on a well until we get there. There are so many people that are buying a cabin, they’ll say, hey, we want to get a well test. And then I’ll show up and be like, oh, this one’s on you, municipal. You don’t have a well. They’re like, oh, we didn’t know that. Or, you know, a lot of times we get a request for septic and we show up and it’s not even on septic.
Speaker D [00:51:52]:
So I pretty much have to get to the property. Then I’ll make determinations. You know, if I see a septic tank overflowing while I’m there, I’m going to say, hey, you guys probably need to get that pumped out when those things pop up. But as far as an in depth well inspection, I don’t really recommend it until there’s a reason or something going on that’s visible that we see the water quality. If you’re doing a cabin with a well. It’s just worth $200 to have that water checked out to keep your tenants from getting sick. And always have that piece of paper that shows, hey, we just had this tested. It’s clear.
Speaker D [00:52:27]:
Maybe it was the food poisoning that you got at the restaurant last night. It’s not my water. So it’s kind of a liability issue, too. It just really saves a lot of problems down the road.
Avery Carl [00:52:37]:
Yeah, I’ve seen a lot of people. So typically when people get well inspections, what’s being inspected is the. Are the elements of the well. Like, is the pump working, all that, and they’re not checking the water quality. A water quality test I’ve seen would be a different. Maybe I’m wrong, maybe there are people who do both, but, uh, would be a different inspector. And I have never seen anyone who got a water quality test that did not come back with some kind of coliform in there. And what do you do to mitigate that?
Speaker D [00:53:10]:
There’s multiple things you can do. The shocking method is just a great. It works. It definitely works. But I like to see a black light. I think a black light is just a better method that’s going to last a lot longer. It gives you a way to monitor, but you’d be surprised. I would say it’s a 50 50 toss up with the ones we’re doing right now.
Speaker D [00:53:28]:
Some of them come back, and the question, and it’s crazy because people say, well, how much E. Coli or coliform is okay in my water? And I know it sounds like a funny answer, but you always remember it, and it’s just like, it always depends on how much poop you like in your water when you’re drinking. And they’re like, well, oh, that’s gross. And I’m like, exactly. So, you know, either way, both are a form of a fecal matter of some sort, whether it be coming from birds, mice, ground level water, cattle that are around that are, you know, getting into a water source or like that. So when we see it, just get a black light, because the liability issues, people can get sick. E. Coli is.
Speaker D [00:54:10]:
Is the most dangerous one of the two, but coliform is also a form. They’re both fecal matter, so definitely good to get it taken care of.
Avery Carl [00:54:19]:
Delicious.
Speaker D [00:54:21]:
Yummy. Yes.
Avery Carl [00:54:22]:
Yeah, guys, so we are kind of getting towards the end here. Is there anything specific that you guys have as agents run into a lot that you would like for Mark to address on this call?
Tim Grillot [00:54:35]:
I mean, we went over a lot of it. I think I think a big thing on the agent side is just kind of understanding the inspection, especially if you’re new inspections. When you’re new, it’s scary. You get this thing back and it has all this stuff on it. And the inspector’s job is exactly that. They’re supposed to show you everything, but that doesn’t mean it’s a bad deal or that your house is falling down or even that. A lot of stuff you may not even have to address today. You know, one thing I’ve recommended for some new clients sometimes is do a small investment and get an inspection done on the house you live in, and it can open your eyes to what you live with every day that you don’t even realize that would show up on a typical home inspection.
Tim Grillot [00:55:14]:
So home inspections are great because kind of, you know, it is. It can be something that we go on and negotiate for repairs. Absolutely. But also a lot of it’s just informative. So you know where you are and where you stand with that house when you take it over. And you know what the issues are. And there’s, you know, I like to put things in buckets. What are things I, like, have to fix, like, before I can put this thing live, which that’s usually really small or nothing.
Tim Grillot [00:55:36]:
And then, you know, what’s something I may want to do in the next year? And what’s something I want to do in the next five years, you know, because some of the stuff, you know, one thing you didn’t bring up at loose toilets, you know, I’ll say it’s a joke, but every cabin Smokey’s has got a loose toilet. You know, we got, you know, visitors coming in and being rough on toilet. So a lot of inspections come back to loose toilet. That’s a really easy fix. You pull the toilet up, put a new axe ring in and re secure it. So there’s stuff like that that shows up that. So anyway, my point is, I guess, don’t. Don’t totally get freaked out when you get this lengthy inspection.
Tim Grillot [00:56:04]:
It’s like, oh, my God, there’s 30 things on here. There should be. I mean, it’s a house. They all have stuff.
Avery Carl [00:56:10]:
Okay, so one really important piece of information that a lot of people don’t realize that I want to make sure we hit on is the buyer’s final walkthrough. So, Tim, what is the buyer’s final walkthrough on a contract? Because there is a document sent at the end of the contract period when? Right before closing. So let’s talk about that.
Tim Grillot [00:56:30]:
Yeah. So essentially, you know, your final walkthrough is kind of a final verification, and it can. It can kind of difference. There’s different circumstances for final walkthrough. One circumstance would be like, everything is already cleared through your inspection contingency, and it’s more of just making sure the property is still in the same basic condition that it was when you first started looking at it. And, you know, they call out a few things, like normal wear and tear is allowed. You know, these are rentals, so little scratches can happen here and there. But another thing that can happen, you know, is you had repairs made.
Tim Grillot [00:57:00]:
The final walkthrough, a lot of times will be to kind of make sure those repairs are completed. So those are kind of two different things for, you know, final walkthrough. A lot of people, you know, it just depends on people’s appetite. Some people waive them, to be honest. You know, these things, it’s not like a normal house where, you know, these people live out of state. You know, I’m not going to say, like, they couldn’t take all the furniture, but the odds of an owner, like, emptying the house out is pretty slim because most of these people, that would be a massive inconvenience to the seller to do that. But, you know, you absolutely want to use your rights for a final walkthrough, you know, so. And then as far as did you, who does the final walkthrough? You know, I mean, you don’t really.
Tim Grillot [00:57:41]:
Well, you don’t. Your agent’s not going to do your final walkthrough. And that’s. That’s something.
Avery Carl [00:57:45]:
It’s not that they won’t. It’s that they can’t. Right.
Tim Grillot [00:57:48]:
Right. They can’t. Yeah. And honestly, it’s not in the best interest of you as a buyer for your agent, too. You know, you and your agent normally would have a great relationship, but really, it’s your best interest to have a licensed inspector to go back through and do the final walk through for you because an agent is not qualified to look at all the things that you want to look at, you know? Again, some of these, all you’re looking to do is make sure the tvs and couches and everything are still there, but still, you want. You want somebody going through there that’s qualified. And like you said, Avery, agents are actually aren’t even allowed to do that. So.
Avery Carl [00:58:21]:
Yeah. Yeah. So here’s some things that I want to hit on about that. So agents are not in Tennessee allowed to do final walkthroughs, because, well, there’s two. There are two scenarios that, well, a final walkthrough happens all the time, but there’s two points I want to make about this one. So if there were repairs done by the seller that you negotiated in your inspection period, you want a licensed, either contractor or inspector to be the one to say, yes, this was done, that’s finished. Like, I don’t know if a wax ring on a toilet was installed, right? I am not. I’ve never done that.
Avery Carl [00:58:55]:
I’m not a professional in that field. I don’t know how to do it. Um, you definitely want to have your inspector, who, typically the best person to do this is your inspector, who did the original inspection, because they’re checking to make sure that, a, repairs were done or done right, and b, that it’s in the house is in the same condition that it was in when the original inspection was done. Now, that’s obvious why it’s not in your best interest for your agent to do your final walkthrough when there have been repairs done. But if you didn’t ask for repairs, maybe you negotiated some sort of credit instead of repairs, and you want your agent to go through and facetime you. So sometimes, you know, that can be done. But I would still say that should not count as an, as the official final walkthrough. And I’m going to give you guys an example of that.
Avery Carl [00:59:43]:
That happened to me when I was a new agent, uh, in just a second. So there are two people who can do your final walkthrough. You, as the investor, can come in and. And do your final walk through yourself, or your. The next best bet is going to be your inspector that you hired to do your home inspection. Now, when I was a new agent, I did have an out of state investor who asked me to do his final walkthrough. Uh, he had not asked for any repairs. I think we’d negotiated a seller credit on some things, so I did.
Avery Carl [01:00:10]:
I took a video of the whole house, walked through, sent it to him. Everything’s good. Everything appeared to be the same, and we closed. And then two or three weeks later, he called me, screaming that I did not act in good faith on his final walkthrough because the floor around one of the toilets was squishy. And the only way that I could have known that where it was was squishy, because back to the wax ring. The toilet needed a new wax ring.
Tim Grillot [01:00:39]:
Um, we’re all experts on toilets around here.
Avery Carl [01:00:42]:
Yeah. Yeah. The only way I would have really known that was if I would have walked over to the toilet and, like, sat down on it. And I just, you know, walked through, took the video, walked out. So that’s another, that’s a really good example because, again, I’m not a contractor. I wasn’t hired to check the toilet. I didn’t know the toilet needed to be checked. So, you know, it’s just one of those things where it’s either you or the inspector.
Avery Carl [01:01:07]:
And then, you know, I got, he came after me because I didn’t find that the squishy subfloor. So, so that’s why you really either a want to do it yourself, because nobody is going to check all that stuff better than you or have that inspector who is licensed and experienced in that, because I’m just a real estate agent. I’m just walking through. I can send you a video, but I can’t guarantee that any of my contracting skills, because I’m not a contractor, are where they need to be. So that’s just one example. But it’s either you or the home inspector, in my opinion.
Tim Grillot [01:01:40]:
And to that note with the home inspector, have that conversation with your inspector in the beginning, you know, that way, you know, you, like Avery said, it’s best to have the same inspector do it. And that way, you know, have, have the, have that, have that talk up front. So when they first go out to do the inspection, say, hey, I’m probably going to want you to have to go do the final walkthrough at the end of this. So, you know, just kind of, you know, take note of some things or whatever, especially if you’re getting repairs done.
Avery Carl [01:02:04]:
And also keep in mind that different states have different rules and customs in terms of the entire contract process. But the final walkthrough also, because a lot of you who are listening to this, maybe you’ve bought properties in Ohio or Illinois or somewhere, and your agent has done your final walkthrough every time. And it’s possible that in that state, that that’s allowed and that’s fine, but a lot of states don’t allow it, like Tennessee, but, you know, and it’s also possible that, but that agent didn’t understand that it’s really not in your best interest for them personally to do it. So, yeah, it’s really, really convenient to just have, be able to have your agent go take a video, FaceTime or whatever, and most of them will, of course, ask them to do that, just, you know, make sure. But it can’t really count as a actual, like, full on final inspection, because agents are not inspectors, but, you know, walking through, taking videos. As long as you’re not trying to count that as the official final inspection, then, you know, you’re good there.
Tim Grillot [01:03:03]:
And it also should be noted that it is a, you know, the final walkthrough is not a reinspection. You know, I mean, it’s not like you don’t get there, like, reinspect and find all kinds of new stuff. You’re really just, you’re really verifying that the property, you know, one is, you know, in very similar condition to when you went under contract with it and then to any repairs, you know, that we’re done or are done, you know, finished up. So. But it’s not a complete, total start over on the inspection process.
Avery Carl [01:03:29]:
Yeah. Awesome. So, yeah, I think that that’s enough on that subject. So let’s move on to the next one. Yeah. So, Mark, what I was going to ask you in closing, I think this is a really good question. Is there such a thing as an inspection? Is going out to do an inspection and finding zero things to write down on that inspection report, even on new construction?
Speaker D [01:03:53]:
Oh, absolutely not. There’s always going to be something that needs to be corrected or adjusted. So, no, there’s no such thing as a perfect house. People built it. People can overlook it. And a lot of times it’s not that it’s anything wrong. Maybe it just wasn’t correct. Maybe there’s another way to do it because an inspection is definitely an opinion, but there’s no such thing as a perfect cabin.
Speaker D [01:04:15]:
Adjustments can be made. And generally, when we make comments on everything, it’s just helpful helping you with the longevity of your cabin. This is coming up. This is showing somewhere. This is what you need to do now. But I send out a really great email with my report that says, call me after you review the report. Let’s go over this thing in detail. And a lot of times I go in order.
Speaker D [01:04:36]:
The first question everybody asks me, Mark, if you were buying this thing, what would you do today? And then there’s several times I’m like, you know, if you don’t want to spend any money, rent the thing for a couple of years, bank the money, come back, do some repairs later. There’s nothing keeping you from Turnkey right now. You know, we’re not worried about the pink wall. That doesn’t keep you from renting it. The scratches and scuffs on the floor from the dog, the animal doesn’t affect anything. So we do go over with the clients as to what we think should be done if there’s any emergencies. And it goes back to most of the time, like, and I meant to bring up the loose toilets because that’s super common. And what happens is after the cabin is built, the toilet goes down.
Speaker D [01:05:15]:
And then after everybody uses that toilet, they compress that wax ring. And the fix always, after the first year or two of being built, just go back and snug it up. But our main reason for really wanting to point out that loose toilet is we don’t want the water damage from a leaky toilet to go in. And then when we go into the crawl space and look up and. And make those notes of like, hey, you’ve got some damage at your subfloor around a plumbing penetration. Usually that’s just where the seepage comes out of the toilet. So we bring those up, snug those down a lot of time. The gaskets even.
Speaker D [01:05:48]:
Okay. And it could be snugged down, especially if it’s new. So that’s also a super common write up that we do.
Avery Carl [01:05:55]:
So you’re telling me that even a brand new construction that has just been built last week is going to have pages and pages of stuff on the home inspection?
Speaker D [01:06:05]:
Oh, my goodness, yes, absolutely. A lot. Because nobody’s lived there, nobody’s been there yet, and nobody’s inside. So we’re going in and finding all those things. A new cabin inspection almost isn’t inspection. It is an inspection, but it’s more of a glorified punch list. It’s kind of like we’re coming behind and catching up and doing what the contractor guys, you know, maybe. Maybe Tom and Bill were supposed to go in the room and finish the stain or.
Speaker D [01:06:31]:
Or nail up some trim or put on some doorknobs. And then, you know, they went to lunch, they didn’t come back, and then they overlooked it. So then when we go in, we’re basically doing the list that the contractor or someone that works for the contractor does that wasn’t completed yet. Some of the plumbing may not be connected. They may have had a problem getting a window in. So most of it is just incompletions or incomplete installations or things. We have a lot of clients that come in and they flip out, and I’m like, guys, they’re not even finished yet. You know, like all of the appliances being in the floor and not installed or not a deficiency, it’s just not finished yet.
Speaker D [01:07:10]:
So it’s definitely a glorified punch list. But, yeah, there can be pages, actually, more pages than an old cabin.
Avery Carl [01:07:18]:
Interesting. And, yeah, I was a listing agent before on a. On a new construction a while back, had an agent say, well, there’s 28 pages. And I’m like, but all they. They list everything. You guys list everything. And sometimes it says no repair needed or monitor. And so on a huge, brand new construction, there will be pages and pages of things that say, in good condition or mediocre condition or needs repair, like needs attention now.
Avery Carl [01:07:45]:
So I think that’s really important for the new construction buyers to hear because a lot of times they think that it should be perfect because it’s new. But it’s kind of the opposite of an existing construction. So existing constructions are going to have things on the inspection because of wear and tear, whereas new constructions are going to have things on the inspection because it hasn’t been lived in yet. So they haven’t run the shower and the washing machine at the same time. And there may be a leak somewhere. So it’s just things that you don’t know yet because no one has lived in it. One more thing that I wanted to ask you. Can a buyer who really wants to negotiate a good deal during the inspection period, can they ask you to be extra dramatic on an inspection report in order for them to be able to ask for the most amount of money back?
Speaker D [01:08:34]:
We have that all the time. You know, some of the scenarios that we get into is I’ll have people that might put four or five cabins under contract at the same time because they’re out of town. And then, you know, we get these calls, people I don’t even know, and they’ll say, hey, Mark, I’ve got, you know, we just bid on, you know, we have five or six cabins under contract. I just want this one that we found. I need you to kill these deals for me. And I said, so how does that work? I said, you just want me to randomly make up some stuff? Or what do you want me to do? And so, yes, we definitely get those calls all the time. And we get people to say, hey, I need to use this inspection. And I know some people might do that.
Speaker D [01:09:14]:
I can’t do that because I can only report on what I see. Sometimes it makes people mad. But we definitely get that question asked a lot. Mark, I need this report to get the price reduced, or I need this report to get out of the deal. And I literally have seen people that just wanted to get out of it because they had. I got in the situation last week. This is a really good example. So I know a realtor personally, and her client has been using her for years, and he calls me and says, hey, I have this deal going.
Speaker D [01:09:44]:
And then I said, okay, do you want me to call XYz and set up everything is, oh, no, no, you can’t call her. We’re using somebody else on this other one. And I’m like, okay. So, yes, I see those sort of things all the time where everybody wants to be dramatic, but. But we can’t report on something that we can’t see. If there’s not a problem. We just don’t make it up.
Avery Carl [01:10:05]:
Yeah. And, guys, if you find yourselves in that situation, well, I have two points to make about this. One. If you’re only pre approved for the amount to buy one cabin and only ride one horse at a time, because if you’re getting under contract on five cabins and then saying, oh, well, I’m only going to buy the one that gives me the most concessions, best case scenario, you’re losing four sets of earnest money. Worst case scenario, you’re getting sued by four people. Now, is that going to happen? Probably not, but our goal is to educate you so you don’t get yourself into a situation that you can’t get out of. And be honest with your agent. Say, hey, we have, but we’re under contract on these two deals.
Avery Carl [01:10:41]:
I really only want this one. Help me, you know, help me figure out the best way to acting in good faith. Get out of contract. Uh, on this other one, you can’t. Getting under contract on four or five at a time with only the intention to buy one is acting in bad faith. So have that conversation with your agent up front about what you want to do and what you’re looking for so they can keep you from getting into bad situations. And if, you know, something happens and there’s something on an inspection report that’s really making you uncomfortable, your agent is on your team. I see a lot of people who don’t want to tell their buyer agent something because they think that they’re going to tell the listing side.
Avery Carl [01:11:18]:
No, your. Your agent works for you. So if there’s a reason that you need to get out of a contract, like, you know, contingency wise, be honest with your agent and say, hey, you know, I’m in a bad situation on this one. What can we do to get me out of this? Or, you know, whatever it may be, your agent works for you. They’re on your team, and they are there to help you, not to try and make the deal close. So I just wanted to hit that in closing. Does anybody have anything they want to add before we go?
Tim Grillot [01:11:45]:
I double down on that. You know, just the whole acting in good faith, you know. I mean, if you have the funds and everything you want to buy three cabins at once, go for it. And we’ve done that. We’ve helped clients through multiple deals like that. But if you’re just trying to get the best deal and get a bunch tied up, you’re asking to get yourself in a bind. And it’s just, it’s, it’s something that I will heavily, heavily advise against, you know, as an agent. You know, if you’re whatever your, if your intention is to buy one, we’re going to get one under contract at.
Avery Carl [01:12:13]:
A time, riding one horse at a time. Unless you can get three horses, then by all means get three horses. But anyway, thank you guys so, so much for being here. Lots of great information. If you guys want to buy a house with the short term shop in the Smoky Mountains, you can email us at agents at the shorttermshop.com. or you can go to strquestions.com. we’ve got a weekly Thursday call where we answer a lot of your questions. Or if you guys want to hire mark, by the way, as a buyer, it is your job to hire your home inspector, not your agents.
Avery Carl [01:12:44]:
It has, you have to be the person hiring any vendor. So if you want to hire Mark, Mark, where can they find you?
Speaker D [01:12:51]:
You can find me. First of all, a number is 865-274-0808 or insight home inspection of Tn.com.
Avery Carl [01:13:01]:
Awesome. Thank you guys so much for coming. Lots of great information today. We’ll catch you on the next one.
Tim Grillot [01:13:06]:
Thanks, Avery.
Zeke Goodman [01:13:07]:
Thank you.
Speaker D [01:13:08]:
Thank you.
