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 new-build property you want to buy or for a contractor if the property is a flip. A punch list comes into play when you're buying new-build real estate properties or renovating existing ones. This written contract is a list of all the things you want done before you close or before you pay your contractor. Another word for a punch list would be a ''checklist.''
The purpose of a punch list
The purpose of a punch list is to get all the items you want fixed completed before you buy the property or pay the contractor. The punch list can save you money, time, and aggravation by having the seller responsible for getting the property in shape or by ensuring your contractor completed the work. Without a punch list, both parties might know what needs to be done but also might assume the other party will handle it. Because a punch list is a written contract, it serves to clear up any misunderstandings.
How to build a real estate punch list
You or your building inspector should walk the property, noting all the problems while doing so. You might note a door that doesn't close properly, electrical or plumbing defects, nail heads that show, floors that squeak, or windows that stick, for example.
Here are some common items that often need attention in new builds and renovations and that are generally included in punch lists if something is wrong:
- HVAC system
- Paint job
- Cabinet doors/drawers
To build your list, you would include everything you and your inspector find in a specific and itemized manner. For example, instead of noting ''leaky faucet,'' a better punch list item would specify which faucet: ''The kitchen sink faucet drips and needs to be fixed.'' You build the actual punch list by noting everything you'd want fixed, including a photograph or video of the problem if possible, before you call the job finished.
Who gets the punch list?
You and the seller get a copy of the punch list when you're buying a new-build property, and you and the contractor get copies when renovating a flip. You can write a punch list on a piece of paper, or you can go digital, as most punch lists are done today. Apps are available for smartphones, tablets, and laptops to help you. If you want a punch list app, just search the internet and pick one you like. The seller can share a copy of the completed punch list with the construction manager and any subcontractors as well.
The seller might not agree to fix everything you include in the punch list. It's important to go over the items, and you both need to be on the same page before finalizing the punch list.
An effective negotiation method is one I've named the ''Alfred Hitchcock method.'' When Alfred Hitchcock was making his famous movie ''Psycho,'' he wasn't sure he'd get the now-infamous shower scene approved. So he pitched it as being much more violent and gruesome than what he really wanted,. And when the scene was filmed, it was a toned-down version of the original pitch.
In a similar fashion, you might want to pad your punch list, putting in items you really don't expect to get done in order to get approval for what you really want.
Use the punch list during your final walk-through
During the final walkthrough, check your punch list to ensure everything that's supposed to be done is done correctly. If not, you might need to delay closing for a new build or get your contractor to come back out. Never close on a property or pay a contractor on a promise; wait until your negotiated terms are met before you pay.
For trivia buffs: Origination of the term ‘punch list'
The term ''punch list'' is thought to come from the days when a punch list was a paper list. Instead of crossing or checking off items completed, a paper hole puncher was often used to indicate a completed item.
The Millionacres bottom line
Make your punch list as thorough as possible, and then conduct a walkthrough before closing, checking to make sure everything is in order. If problems haven't been fixed regarding a new build, delay the closing if need be; otherwise, you'll need to deal with those problems yourself once you're the owner. Pay your contractors the final amount only when work is completed to your satisfaction.