Active real estate investors are always on the lookout for the next deal. Most of the time however, the subject property simply doesn’t work out for any variety of reasons. When a prospective purchase is spotted, the gears begin to turn in order to real estate investingmake a proper evaluation. An inspection is ordered.

A contractor makes a visit and prepares an estimate of cost to repair and the time it will take to prepare the property for the market. An appraisal is ordered and compared with similar properties in the neighborhood. Or a simple “no” from the seller can halt an acquisition.

A project can be sidelined or even cancelled altogether throughout various stages of the purchase process. Yet during the evaluation period, the investor incurs certain costs that must be made to complete the evaluation. There’s no way around that. And there are other costs associated with the investment that may be charged but never paid. Which costs would those be?

When you apply for financing, the bank will typically ask for funds needed for an appraisal and this can range anywhere from $400 and up, depending upon the type of property. Once paid, the lender orders the appraisal and waits a few days for the report to be completed. During that time, a property inspection is ordered and paid for and can arrive before the appraisal is completed. If the inspection comes back with showing significant repairs are needed, the investor may decide to back out of the transaction. Immediately after, the appraisal report is delivered, although it is no longer needed. Is there a refund due the investor because the deal is dead? Probably not. The appraisal fee is for an appraisal and the work has been completed as requested.

There are other charges that may appear on a closing cost estimate such as a bank’s loan processing charge or an underwriting fee. There are third party fees for title insurance, escrow and a host of others. When the loan is cancelled, even if the loan is partially processed and even in underwriting, the borrower is not required to pay third party and bank charges if the sale does not go through.

For services ordered to evaluate the offer, the money is non-refundable. For services not yet delivered or completed, the borrower is not held liable and moves on to the next property.