How Do You Build a Real Estate Punch List?
A real estate punch list is like a honey-do list, only not for your significant other but for the seller or builder of a newly built property you want to buy, or a contractor if the property is one Flip acts. A hit list comes into play when you buy newly built properties or renovate existing ones. This written contract is a list of all the things you want to do before you close or before paying your contractor. Another word for a hit list would be a checklist.
The purpose of a hit list
The purpose of a hit list is to get all of the items to be repaired ready before you buy the property or pay the contractor. The hit list can save you money, time, and hassle by keeping the seller responsible for getting the property in shape or by making sure your contractor has completed the work. Without a hit list, both parties may know what to do, but also assume the other party will deal with it. Since a hit list is a written contract, misunderstandings are cleared up.
How to Create a Real Estate Punch List
You or your construction inspector should enter the property and make a note of any problems. You may find that a door doesn’t close properly, there are electrical or installation errors, nail heads are visible, the floor is creaking, or windows are sticky.
Here are some common points that need to be taken into account in new buildings and renovations and that are generally included in hit lists if something is wrong:
- domestic appliances
- HVAC system
- Painting work
- Cabinet doors / drawers
To build your list, you would include everything you and your inspector find in a specific and detailed way. For example, instead of noting “leaky faucet”, a better punch list item would indicate which faucet: “The kitchen sink faucet is dripping and needs to be fixed.” You create the actual punch list by making a note of anything you would like it to be fixed, including a photo or video of the problem if possible, before you label the job complete.
Who gets the hit list?
You and the seller will get a copy of the hit list when you buy a newly built property, and you and the contractor will get copies when you renovate a flip. You can write a hit list on a piece of paper or work digitally like most hit lists are created today. Apps are available for smartphones, tablets and laptops to help you. If you want a punch list app just do a search the internet and pick one that you like. The seller can share a copy of the completed hole list with the site manager and any subcontractors.
The seller may not agree to repair anything you put on the hit list. Going through the elements is important and you need to both be on the same page before you can complete the hit list.
An effective method of negotiation is what I have called the Alfred Hitchcock method. When Alfred Hitchcock was making his famous film Psycho, he wasn’t sure if he would approve of the now infamous shower scene. So he called it a lot more violent and cruel than what he really wanted. And when the scene was shot it was a toned down version of the original pitch.
Similarly, in order to get approval for what you really want, you might want to populate your hit list and include items that you really don’t expect to get done.
Use the field list during your last tour
During the final walkthrough, check your hit list to make sure everything you want to do is done correctly. If not, you may need to delay closing a new building or get your contractor to come back out. Never close down a property or pay a contractor for a promise. Wait for your negotiated conditions to be met before paying.
For trivia fans: origin of the term “list of hits”
It is believed that the term “hit list” dates from when a hit list was a paper list. Instead of ticking or ticking completed items, a paper punch was often used to indicate a completed item.
The bottom line of Millionacres
Make your hit list as thorough as you can and do a walkthrough before closing to make sure everything is okay. If issues with a new build have not been resolved, delay closing if necessary. Otherwise, once you are the owner, you will have to solve these problems yourself. Do not pay your contractors the final amount until the work has been completed to your satisfaction.