We suspect that when buyers forgo a professional inspection, it’s to save costs during the purchasing process. In reality, by doing so they’re leaving money on the table in the form of bargaining power. The question is not “does the building have defects?” but rather “where are the defects?” By identifying them through an inspection, you give yourself an opportunity to then negotiate repairs and/or pricing reductions. In the overwhelming majority of cases, these repairs or reductions more than cover the inspection fee.
A few examples:
- We recently worked with a client that was purchasing a 50,000 square foot industrial building. They had been leasing the smaller of two units and believed after 10 years they were fully aware of the property’s problems, but their broker highly recommended having us perform a Property Condition Assessment with an Opinion of Cost to Remedy. We documented over $150,000 worth of deferred maintenance and necessary repairs.
- Even simple buildings can have expenses that add up quickly. Last year we inspected a 10,000 square foot warehouse that was marketed as having a brand new roof. The buyer believed inspection was unnecessary because the building was simply four walls and a roof, but hired GRCBI at the urging of a silent partner. It turned out that the seller misrepresented the roof’s condition and it was actually original to the building. It leaked all around the perimeter and was causing deterioration of the concrete block walls below. The buyer received bids totaling nearly $60,000 to correct.
- It’s not always the buyer that is reluctant to inspect. GRCBI was contacted by an attorney buying a medical office as an investment. The building had a complete gut and remodel earlier in the year with brand new electrical, HVAC, and plumbing. The broker urged the attorney to skip inspection to keep
things moving since everything was new, but the buyer was cautious and hired us. GRCBI identified approximately $75,000 in necessary paving repair.
In all three examples, our clients were able to negotiate repairs or price reductions far in excess of our inspection fee. Commercial buildings consist of several complex systems that must work together to ensure proper function and economic viability, and it is nearly impossible to keep everything in perfect condition. As an investor, it only makes sense to take advantage of this fact to get the best deal possible. A commercial building inspection pays for itself.