It’s seems like the perfect home – you’ve been wooed by a savvy, yet informative, real estate agent and the fresh-baked cookies at the open house were a nice touch.
“For many people right now who have the money and who qualify [for a mortgage] it’s a great time to purchase a home. The inventory is high, prices are low and mortgage rates are low,” says Elizabeth Mendenhall, 2011 vice president and liaison to committees for the
National Association of Realtors.
But don’t be fooled by a fresh coat of paint and updated countertops. Throwing copious amounts of cash at a series of unfortunate events is hilarious when it’s
Tom Hanks and Shelley Long, but going broke on unexpected home repairs isn’t funny when it happens to you.
It’s time to put down the cookies and check for cracks. Here are some tips on how to avoid purchasing a money pit:
Open your eyes and your noseLook for signs of damage or decay when touring a home. Cracks in walls, pooling water along the foundation, wet basements and leaking windows are warning signs buyers shouldn’t ignore. “Areas of large costs generally revolve around major systems of the home like the foundation, roofing, major electrical items, things of that nature,” says David Tamny, president of the
American Society of Home Inspectors (ASHI). “Certainly wet basements and foundation problems can lead to large money problems.”
Pay attention to potential mold issues, especially with certain types of exteriors like stucco or cladding, Tamny recommends. Be on the look out for strange odors or staining, which could signal water damage, leaks or a potential rodent problem. Check windows to ensure they haven’t been painted shut and be mindful of fogging, which could signal the window’s seal has been broken or warped.
Rewiring a home’s electrical system doesn’t come cheap. On your initial viewing, check that all outlets and switches are in working order and be sure to inquire whether the residence has knob and tube wiring. Similarly, flush toilets throughout the home and test kitchen and bathroom sinks for sluggish drainage or reduced water pressure.
Don’t be seduced by granite countertopsBe especially conscious of newly flipped or extensively renovated homes, Tamny warns. “That’s certainly an area where people are being subjected to the wolves,” he says. “The professional flippers are very good at cosmetically covering things up and making a house look very good for sale but a lot of them do a terrible job when addressing functional problems within a house.”
Think a new construction will easily pass an inspection? Think again — a new construction demands the same attention to detail. “Even if they [the builder] complies to the letter of the law as far as code goes, there could be lousy craftsmanship,” Tamny warns.
Consult a professionalQualifications for home inspectors vary by state, so do your research to ensure the professional you hire is properly licensed and possesses the required amount of experience for your area. A home inspector can warn you if you’re about to buy a lemon of a residence and can help to navigate potentially troublesome properties like abandoned homes in foreclosure.
“If you walk in and the basement is wet or there is mold growing on the walls than you don’t have to be a rocket scientist to know there’s a problem, but most homeowners don’t have the expertise to do a comprehensive inspection and determine if there are significant and real problems with a house,” Tamny says.
Buyers should come armed with specific questions for an inspector: How long will the inspection process take? Do you specialize in residential versus commercial property? Do you maintain membership in a professional home inspection organization?
“For the ASHI you need to perform the minimum 250 inspections, you also have to pass the national home inspectors exam and abide by our standards of practice and code of ethics. Beyond professional affiliations and are you licensed, they should be asking how much experience do they have, how many homes have they inspected and do they carry omissions insurance, areas of expertise especially if someone is looking at a historic home,” Tamny says.
While a home inspector will likely serve as your first line of defense, an engineer’s expertise may also be warranted.
“If a house has a structural problem that is identified and there needs to be further consulting than a structural engineer may be brought in to address structure, but I wouldn’t hire an engineer who doesn’t have specific experience and qualifications in inspecting houses because the two are not the same thing,” Tamny says.
Get it in writingA formal home inspection report and digital photos of the structure will serve as insurance for a new buyer,” Mendenhall says, adding a real estate agent can also offer advice on how to maintain important documentation. “Certainly if there were ever to be a situation where problems were to ensue later on, having documentation in writing is an important step in verifying the information you receive,” she says.
Watch the fine printEnsure your purchase contract allows for a home inspection period before you sign on the dotted line. “You want to make sure you have an opportunity to do inspections on the house you’re interested in and learn the condition before you’re obligated to the purchase long term,” Mendenhall says.
Inspection costs will put a dent in your wallet, but an professional consultation will likely save you money in the long run and protect the biggest investment you’re likely ever to make.
http://blogs.reuters.com/prism-money/2011/01/18/first-time-buyer-5-tips-on-how-to-avoid-a-money-pit/
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