How NOT To Buy A Money Pit

Posted in Buyer Blog | 11/10/2012

Windsor House For Sale

Windsor House For Sale

The fear of buying a lemon, or a money pit, is every buyer’s worst nightmare.  After departing with your hard-earned money for what you hope is your dream home, the last thing you want to discover weeks into home ownership, is a leaky roof, a house full of termites and a foundation that is shifting.  While this is a worst case scenario, you would be surprised at stories real estate agents can hear once a buyer has settled in.  The good news is that real estate deals have some features to protect you from these home disasters.

I don’t care how much you love a home, buying a house “as is” is very risky.  A buyer needs to think very carefully about signing over their life to a home that looks good now, but may look completely different once the repair bills come in.

So how can you protect yourself?  Always follow these rules.  The peace of mind is worth it:

Disclosures

Sellers are required to list any issues that would impact a buyer’s decision making.  This is where a buyer will learn often critical details about the home, its history, the neighbourhood, past or needed repairs.  When you receive a disclosure list, however long, make sure you read every page.  If you have any questions or concerns, ask the sellers and don’t hesitate to ask about warranties, repair invoices or contact information.

Inspections

Would you buy a used car without taking it for a spin around the block and having your car technician look it over?  Not unless you have money to throw away!  So you would be surprised that there are buyers who think a home inspection is not necessary, especially when they are considering new construction.  Every home, regardless if it’s brand new, needs a proper home inspection.  It is recommended that this includes pest, property and roof inspections in which you and your real estate agent are present as this is the perfect time to ask questions, especially if something doesn’t make sense.  The information a buyer receives here is valuable, particularly since many of the inspector’s comments and opinions don’t make it into the final report.  Not only that, but it’s a good way to learn how to turn off the utility, including gas and water, in case of an emergency.

Contingencies

After reviewing the final inspection report and the disclosure list, it’s time for a pow wow with your real estate agent.  This may be the time to renegotiate your contract should repairs be required or the price of the home needs to be reduced.  There may even be a chance you want to back out of the deal entirely if the repairs are too costly.  Make sure, whatever you do, that your original contract includes an inspection contingency so that you can safely cancel the contact to avoid buying a money pit.

Warranty

To sweeten a deal, many sellers are throwing in a home warranty to protect themselves and the buyers from any outrageous repair costs in the first year of ownership.  For an average cost of $400, warranties will pay for itself in case of a major repair, like a water heater leak.  The buyer will simply need to pay a fee for a service call, usually around $50.  Make sure that you read over the warranty carefully before agreeing, as some repairs are not included.

It can’t be over emphasized how important each of the above steps really are.  Yet, even home inspections are never a guarantee that your property is in perfect condition.  Here are some areas where a buyer needs to play extra special attention when touring a home with an inspector.  And as a gentle reminder, always ask questions. No question is ever stupid as it’s better to be safe than sorry.

Roof Leaks 

This is the number one issue that can slip through the inspection review.  Most inspectors will not physically go on a roof but rather examine it from the yard.  While they will note missing shingles, they often won’t know if there is a larger problem.  If you are concerned that a roof may have leaking issues, you may want to hire a licensed roofing contractor to give you a more thorough evaluation.

Appliances

While part of an inspection is looking over all major appliances, an inspector will check to see if they are working, but they usually don’t do an internal review of the appliance.  What could work fine one day means it may not work the next, especially with older appliances.

Heating/Air Conditioning

Again, an inspector may check to see if it turns on, but often times the inspection is more general.  Again, having the unit checked by a licensed specialist is always a good idea should you have concerns.

Damaged Windows and Siding

Walk around with the inspector and look over all of the windows and siding.  A problem that doesn’t look big now, could turn into an expensive problem later on.

Under Carpet

If you notice carpet that is moldy, make sure you have the inspector look at what’s underneath.  Don’t forget to have the paneling inspected as well, particularly in a basement where mold is often prevalent.  Of course, the seller’s permission will be needed if further investigation is necessary.

If an inspection doesn’t go the way you had hope with your Windsor house for sale, and you discover that there are many repairs, some costly, it doesn’t mean that the deal is over if you still want the home.  Hire a specialist to investigate and confirm, then work with your real estate agent to go back to the sellers with your concerns and perhaps make a new offer.  If the home owner is eager to sell, then this could work out to your favor.

 

 

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