How much do you do on faith and good will, how much is done in writing, and what are the consequences and outcome of your actions? In my mind keeping an eye on what you do to protect or take care of yourself is something you do for self preservation. If you agree then read on.
If you have bought a home then more than likely you are somewhat familiar with a Contract to Buy and Sell Real Estate. In any contract there are a lot of tasks with deadlines on them. Unless all parties agree otherwise, you are required to complete these tasks by certain dates. If you don’t make the deadlines, then either you are in default of the contract or you lose the opportunity to use that particular item as an escape or for leverage regarding the transaction.
There are other details in a contract that must be met but let’s look at deadlines and items for now. I’m referring to inspections and the importance of handling these properly. If you are an experienced home buyer and seller, fix and flipper, or investor this may all seem elementary to you. On the other hand if you do something long enough sooner or later you may relax too much and that’s when you could get burned.
My suggestion is to find competent people to do inspections. When I refer to competent help, it isn’t the first person in the yellow pages. Find an expert. Investigate and get the right help. Get inspections done in time and make use of your Objection Deadlines. Document objections in writing prior to the deadlines, then you have an out or leverage to have the item fixed or replaced.
In certain situations you may not be given the opportunity to do this. If you are buying a foreclosure or a property that has been foreclosed upon the property is usually being sold as is. Those could be the bank’s rules. If you don’t like those rules don’t give up yet.
You can still inspect the property. It may mean that you can’t use the inspections to negotiate on the price, repairs or use the inspection as a way to get out of the contract. They may want you to do inspections before they will sign a contract. Or you may want to do them during the contract period anyway. You can walk away from your earnest money if you find something you can’t live with, but that isn’t how I like to do business.
Depending upon your experience and your reason for buying you may have a different opinion of what is acceptable than I. I think most buyers who are intending to live in a house want the plumbing, heating, roof, and structure to be in good order. These are really not that hard to assess and repair. A furnace is an expensive item but if a replacement or repair can be negotiated then it isn’t that big an issue.
There are things that really scare me. Some are things that most people don’t usually think of. Damage caused by soil (expansive soil, bentonite), meth labs are another one. These are the kind of things that need to be taken seriously because the cost or damages could make the property just not worth it at all.
A property that had a methamphetamine lab and was properly cleaned up and certified doesn’t have to be disclosed. Legal is one thing but do you really want to move your family into that? Talk with some neighbors or ask questions at the police department if you have any suspicion. Be imaginative. You’ll figure it out. You need to be comfortable and you ought to know just what you are buying.
Unstable soil, bentonite. This makes me very uncomfortable. I’ve run across a situation where some people have had a really unpleasant problem. They bought a house several years ago. Recently cracks and bowing in the basement floor appeared due to ground movement. Experts were hired to dig up parts of the floor and put in posts which enable you to level and jack up the foundation. The work is guaranteed and it cost $30,000. That was fine but the soil could still move in some other place on the sides or in front or back. Yep. You guessed it. Now the basement walls are being pushed in from the outside. The guarantee only covers work that was done, not any new problems.
Now with the property values dropping, these folks have a house with additional major damage and the mortgage and repairs needed add up to more than value of the house. They can’t finance the repairs using the house value and they don’t have the money to fix it. Needless to say they are disillusioned.
So, inspections can be a matter of self preservation. The problems those people have will probably cost many tens of thousands of dollars to fix. That isn’t something most people would like to be surprised with. Do your inspections and if you find big problems move on to the next property. But please, do the inspections on the next one too.
Thomas Fazio does Equity Marketing, Real Estate Consulting and is a Licensed Realtor in the state of Colorado. He also consults on Littleton property and Denver houses.
[tags]Home Buying, Buying a new home, buying home, buying a house[/tags]
|
|