The phone rings. The person on the other end is frantic. They need some wood deterioration and remodeling repairs done. They need a bid by tomorrow and the repairs need to be done by the end of the week. Oh, and by the way, you need to wait three weeks for your payment. Why would any contractor in his right mind want this client? Your bottom line, that’s why.
This is the typical phone call you might expect if you are involved in real estate repairs. Why with this kind of pressure would you want to be in this line of work? The business of performing repairs for real estate is a consistent, year around business with abundant opportunities for additional work. The niche of real estate repairs is largely untapped by the construction industry. Finding contractors willing to perform repairs on a limited time frame and willing to wait for close of escrow for payment is difficult. Here is what you should expect if you decide to work in the real estate repair market.
You will not be asked in all cases to wait for close of escrow for payment; but when you are asked, be prepared. Include a clause in your contract that specifies escrow instructions for payment. Find out which company is handling the escrow for the transaction. This information is generally available through the real estate agent. Have the client initial the clause for escrow payment. Copy your contract and send it with your invoice directly to the escrow company.
The local home inspector is the repair contractor’s ally, as repairs are often triggered by a home inspection or pest and wood rot inspection. Inspection reports provided to home buyers initiate thousands of dollars worth of repair work annually. The repairs needed are in all facets of construction; however, are frequently related to wood deterioration.
Before you write your bid, you will want to ask for a copy of the inspection report so you know what the inspector has identified. You will not want to try to bid repairs directly from the report. The report is intended as a reference only and is written in laymen terms for the buyer. Keep in mind as you review the report that the inspector has not removed any building components or used special instruments or tools for the inspection. The deterioration or condition noted maybe more or less extensive than reported once you are able to evaluate the situation further.
If you have questions or need clarification about the component the home inspector reported on, call the inspector. It is the job of the home inspector to identify the area of concern. It is the job of the contractor to fully evaluate the component and determine the best course of action for repair.
During the bid and repair process, be prepared to work with the listing agent. It is a good practice to provide the listing agent with copies of any bids or other paperwork. They can be extremely helpful in obtaining signatures and providing access for timely work and acting as an intermediary between you and the client. They are also informed about the limitations imposed by the transaction and deadlines.
Timelines are critical in real estate transactions. Typically, there will be 30 or fewer days before closing when you are called for repair bids. Get in, do the repair work, and invoice the client or escrow. If during the repair process you find that the problem is more extensive than previously thought, inform the client and listing agent. Agents will be instrumental in negotiating the extent of repairs and obtaining extensions for deadlines when necessary.
Once repair work is complete, often there is a requirement for the home inspector to verify or reinspect the repairs. This requirement is typically imposed by the lender. The home inspector likely will not be privy to your contract with the client, nor will the home inspector generally be able to see the extent of repairs you performed as you have likely replaced the siding or closed the wall before the home inspector returns. You are responsible for workmanship and should make sure that you are satisfied with the repairs and that they meet your clients expectations.
If you are successful at juggling the many aspects of real estate repairs, you are sure to be rewarded with loyal clients who will seek your expertise for future remodeling and repair projects.