I Turned $875 Into $55,000
The ROI of an Inspection
An $875 inspection put $55,000 in my pocket.
Two years ago we bought a 6-unit apartment building in St. Louis.
The seller was asking for $175,000.
We bought it for $120K.
The property needed a ton of work.
We knew it wasn’t worth $175K in its current condition.
But to justify a price reduction, we had to bring the seller to this same realization.
So we did 3 things that most investors don’t:
1. We explicitly expressed how motivated we were to make a deal work.
Most buyers and investors are constantly playing hardball—it’s the only game they know. Rather than highlighting all of the property’s positives, they rattle off as many negatives as they can think of.
Sellers can smell this negotiation tactic from a mile away. It’s the oldest trick in the book.
Furthermore, once you frame yourself as a “difficult” purchaser, it turns both the seller and listing agent against you.
Whether it’s a property - or anything else - who wants to work with someone who has a negative disposition?
It sets the stage for a miserable, antagonistic transaction.
With this in mind, we went the opposite way. We listed everything we liked about the property—location, unit mix, basement storage, on-site parking.
Not only did this position us as an ally, but it helped build trust and goodwill.
Immediately, the seller and listing agent viewed us as the good guys; contrary to all of the other shark-like buyers and investors that were circling the transaction.
And above all else, it told the seller and listing agent loud and clear, that we were motivated to make a deal happen.
Which in return, made them (the seller) amenable to any concessions and propositions we put forth.
2. We itemized and quantified each line item in the inspection report.
Most buyers and investors make requests that lack any rhyme or reason.
They pull a number out of thin air and ask the seller to shave it off of the price or credit it toward their closing costs.
This rarely results in your favor.
Often times, sellers will either counter your request or reject it altogether.
Knowing this, I took a more calculated approach.
I combed through the inspection report and pinpointed the items of greatest concern.
Essentially, I ignored the small fixes and focused on the most expensive issues.
From there, I gathered multiple bids for each repair.
I took the lowest estimates, listed them in a detailed email along with a copy of the inspection report, and sent all of this over to listing agent.
In the conclusion of the email, I once again reiterated how much we like the property, but I finished with:
This is what it will take for us to get a deal done. . .
(A) Reduce the price
(B) Resolve the list of issues
(C) Fix some and credit the rest
Let me know which route your client would like to take.
We look forward to working together and getting this transaction across the finish line!
They went with the easiest option of the three and dropped the price.
But it’s important to note, had I made this request without backing it up, the outcome would have been completely different.
I had to paint the full picture, so that the sellers could see the deal from my point of view.
3. We gave the seller options.
The last thing that we did to seal the deal was provide options.
Most buyers and investors give the seller one lane to go down.
In doing so, you’re telling them: it’s my way or the way.
But nobody wants to be told what to do. They want options to choose from.
When you provide a sense of optionality, it makes the person feel like they’re dictating the terms of the agreement.
It empowers them—or so they think.
In actuality: You’re giving them 3 paths to choose from, all of which lead to your desired outcome.
Of the options I listed above, I would have been happy with any one of the 3.
But by allowing the seller to choose which one made the most sense to them, they were happy with the result as well.
I turned a zero-sum game into a win-win scenario.
We both walked away with what we wanted—my trophy was just a bit bigger.
You shouldn’t treat inspections like just another to-do on your due diligence check list.
You should treat them as an investment.
At a bare minimum, the inspection report will tell you everything that’s wrong with the property.
It’ll identify all of the repairs that need to be made now, along with those that will likely need to be carried out in the near future.
This information alone is worth the $700 - $900.
But those who get the absolute most bang for their buck, are those who repurpose their inspection report, and use it as their core lever of negotiation.
Coupling each finding with a dollar amount, and packaging their request into a yes-or-yes request.
That’s how you turn $875 into $55K. . . at least that’s how we did it.
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