Everyone has heard the story, right? They have a friend or family member that purchased a property with "character." The goal was to improve their find into that classic updated dream house that is loaded with 1930's Art Decco charm. But the more they dug into the improvements, the more improvements and unexpected repairs there were to be made. The $10,000 remodel had turned into a $50,000 nightmare.
It can be safely said that when you decide to make improvements to an older home the job is always going to be bigger than you think it will be. That is a law of nature-just like inertia or gravity; but when your find that the home you bought has a host of unanticipated repair problems and you had just planned for updating expenses-well, that's not good.
No one wants to be in this position, so how do you prevent it in the first place? My first recommendation, assuming you don't have a family member that is a contractor, would be to work with a real estate professional. Let me be clear-a real estate agent is not a contractor by trade, nor are they skilled at seeing hidden problems in a property. However, they are an extra set of eyes that should be able to detect obvious issues that you may be overlooking because you too enchanted with the property to notice the defects. An experienced real estate agent should be able to note water marks in the ceiling or basement that may need further investigation for example. The realtor might see blown window seals or note slanting floors that could indicate a weakened structure in the floor joists. And your real estate agent should be encouraging you to have a thorough whole house inspection.
Once I was working on a mortgage for a client who felt very put out because his whole house inspection had revealed some serious foundation issues with the property he was buying. These were defects that would have cost him thousands of dollars to repair. He was annoyed that he had "wasted" his money on an inspection for a home he now wasn't interested in buying. Wasted his money he said. Kind of an oxymoron, don't you think?
So-let me be clear about this-the money for the whole house inspection is not wasted. In my own home my inspector didn't find much that was wrong at the time-he did note that the furnace was almost twenty years old as was the water softener. He concluded that even though the roof wasn't actively leaking it was also over twenty years old, had two layers of shingles and would need to be replaced within a couple of years at the most. Armed with this information I was able to negotiate with the seller for a new roof. I was also able to determine that I was probably going to need a new furnace and a hot water heater in the very near future and could budget accordingly. All of the items my inspector found needed attention-there was nothing he didn't find that cost me money. The money I spent on that home inspection was well spent-I was able to plan for future expenditures and while inspectors can't see inside walls, sometimes they can see external signs that something is going wrong that can't be seen. These types of findings should trigger inspections by a specialist-such as a roofer, or HVAC contractor.
Part of doing your homework when buying a home is checking out the neighborhood. I have had clients visit with the neighbors just to see how they liked living in the area. Sometimes those impressions can be telling-such as that they have seen the sewer service truck parked in the drive of the home the buyer is considering every month for the past six months-and twice a month in heavy rain. There's a clue.
Legally sellers are required to disclose any defects that they are aware of in their home when the put it on the market. I believe that most people tell the truth-about the things they KNOW. In many instances there is an issue or defect that a seller lives with that they either don't know about or consider part of the personality of the house and don't realize that it is symptomatic of a larger issue. So while a seller's disclosure is important-it may not give you all the facts and unless you can prove the seller knew there was a problem. Keep in mind it won't help much after the closing. (And who really wants to go to the trouble and expense of going to court anyway?) But-there is something you can do that is a solution.
As part of your sales negotiation you can purchase a home warranty that will cover the mechanical systems and many of the components of your new home for a twelve month period after closing. Often sellers buy these warranties because it does insulate against liability-but they are available to the buyer too and can be renewed.
There is not 100% guarantee that the home you buy won't eat your money like a bowl of Cheetohs on Super Bowl Sunday, but if you perform your due diligence, obtain proper inspections, and purchase a home warranty you will have done everything you can to ensure that you know what you are buying and reduce your chances of buying a lemon. Keep this in mind: yes, this is going to be your home, your retreat, the place you go to recharge. You don't want it to become a source of stress. And-it is also a business transaction-the largest financial transaction that most of us will participate in during our lifetimes-it's important, treat it as such.
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