Scoped a 27-day pre-foreclosure off one walkthrough, and the slab took 41k

Sewer scope is 250 in my market and I can usually get a camera out same week. We run one on every occupied file now, no exceptions. The logic is dull: the money that stopped going to the mortgage stopped going to the water heater about eight months earlier. Cloth wiring you can sometimes catch by pulling one outlet cover in the oldest bedroom, which takes four minutes and no permission you don't already have.

27 days is what priced this deal. Every surprise you hit was findable with a camera and a screwdriver, and the window is what stopped you looking. I hold things for decades so I'm the wrong person to tell you how to move faster, but the pattern I see from the outside is that speed is the product you're selling to the owner and you paid for it out of your own margin.

Cast iron under a slab that's 60 plus years old is a coin flip at best, and once the lateral goes the rest of the run is usually scaled shut too. The part that would have scared me more is the cloth wiring, because inspectors in my area will make you take the whole circuit once you touch it. Did you end up rewiring the first floor as well or did they let you stop at the second?

Your loss sits in the gap between an inspection you couldn't run and a price you'd already committed to. That gap is normal in the pre-auction window and it is a large part of why this stage pays better than bidding at the sale.

Separate two things. Occupied distress correlates with deferred maintenance for the obvious cash reason, so the base rate of a systems surprise on an NOD file is higher than on a listed retail house. A flat 15 percent contingency built off a visual scope is thin against that base rate. Second, your planned spread was roughly 37k against a 340 exit, about 11 percent. At 11 percent, one systems item takes the deal. Operators who work occupied distress tend to carry the unknown as a range and bid at the bottom of it, or they buy a genuine right to walk.

On the clock, a purchase contract can carry an inspection period and a contractual access right, and in some states a servicer or trustee will postpone a sale where a signed contract and a payoff request are in hand. Postponement is discretionary and the mechanics differ by state, so get any of it in writing from the servicer and have a lawyer licensed in that state confirm what your contract can do inside the notice period.

Whether range-and-bid-low is the right correction depends on one assumption: that your ARV was sound. You sold 9 under it in 43 days, so your exit estimate was close and the scope carried essentially all of the error. If the ARV had been soft too, the fix would be a different one.

41,300 over a 38k budget is a 109 percent overrun and 12 percent of your ARV. Going in you were at 241 on 340, so 71 percent of exit before a dollar of work. Planned all-in was 303 against 340, an 11 percent spread on a house you had seen for twenty minutes with carpet down. I'd want 20 points before I signed blind, which probably means your offer was 30k high rather than your rehab being 41k light. Same hole, different wall to fix.

Naive question from the paper side. If someone had bought the defaulted first from the lender instead, would any of this have been avoidable? I'm reading about buying notes and I can't tell whether it just moves the same slab problem to a different date.

Reading this as a services question: is there a business in being the guy who does a two-hour pre-signature scope for pre-foreclosure buyers on 48 hours notice? Camera, panel, moisture meter, photos, flat fee.

If I'm the money on a deal like this, how am I supposed to underwrite a rehab figure the operator built in twenty minutes? harrow's exit was within 3 percent, so the ARV work was fine. It's the construction number I'd have no way to test. Do funders on these just apply their own haircut to whatever budget they're handed?

When you can't open walls there's still paperwork. Ask the owner for the last two years of utility bills, which will show you an electric or water number that doesn't make sense. Pull the county permit history online, because a house with no permits since 1974 is telling you something. And ask directly whether they've had a plumber out and what he said. Owners in default answer that question honestly more often than sellers in a normal sale do, in my experience, because they've stopped pretending.

The real constraint in your story is that the mother and the kids were in the house. Nobody pulls carpet or opens a panel with a family standing there and boxes everywhere, it feels rude and you were already trying not to make them feel worse. So schedule it for a day and a time when the house is empty, and put that in the contract at signing when they're saying yes to everything. Asking for it two weeks later is asking a stressed person for a second favor.

vellum, buying the note puts you behind the servicer's timeline and gives you the loan rather than the house, so the slab is still there and now you're waiting on a foreclosure you have to run yourself. Different business.

harrow, the clause I'd want in that contract is a dated access right naming contractors as permitted entrants, with the seller's obligation to vacate the rooms for that visit spelled out. Also worth knowing that several states have statutes governing purchases from owners in default, and those can require particular contract language, specific notices, and a cancellation period that runs from the date proper notice is given. Which of them applies to your file is a question for a lawyer licensed there, and it changes what an access clause can look like.

Photos of the panel, under both sinks, and the water heater label. Costs nothing and I've seen it save someone a 9k mistake.

The part I'd struggle with is the walk decision. If you'd found the cast iron on day 22 with five days to the auction, does that owner have any path left, or do you just hand them back a foreclosure? I ask because I think I'd hold a bad deal out of guilt at that point, which is exactly the wrong reason to close.

Did the owner sign a disclosure form? I know what sellers have to disclose varies a lot by state and I'd guess a distressed sale doesn't change the requirement, only the odds anyone fills it in carefully.

Asking the thing I'd be embarrassed to ask out loud: did she know about the sewer? Somebody in that house had backups before. I'm curious whether you asked plainly and got a no, or never asked because it felt like an accusation in the middle of a stressful conversation.

I'm building a model for exactly this stage and harrow's numbers are the most useful input I've had all month. I had contingency as a flat 12 percent of budget. Reading this, the right shape is a floor in dollars for systems risk on any pre-1975 occupied house, plus a percentage on the cosmetic work. A slab and a panel don't cost 12 percent of anything, they cost what they cost.

What this thread tells me is that pre-foreclosure isn't really a negotiation strategy, it's a rehab business with a stopwatch attached. The empathy and the letter writing get all the attention and then the money turns on whether someone looked under a sink. I don't know yet if that suits me, but it's the clearest picture of the work I've read here.