In North Carolina and in most other states the buyer has an option to have professional inspections performed on a house during the due diligence period before making the final decision on whether to proceed to closing or cancel for any reason. The seller, on the other hand, is required to complete Residential Property and Owners’ Disclosure Form but is not required to disclose any known issues by having the option to answer “No Representation.” As seller doesn’t have to disclose any issues, the burden is always put on the buyer not the seller. Caveat Emptor which simply means Buyer Beware move courts further away from sympathizing with buyer for their failure to discover issues. The selling agent representing and having a fiduciary duty to the seller is required to disclose any material facts uncovered even those not disclosed on the property disclosure. The catch is that the selling agent may not always know and without the disclosure the buyer relies heavily on the Buying Agent and all ordered inspections. Being in the hands of a good realtor who can guide you through the maze of all these pitfalls especially if you are on the market to buy a property is a plus. Here you need a knowledgeable, trustworthy and a diligent Buying Agent that is loyal to you, represents you in good faith and has a fiduciary duty only to you.
1. Never buy a house with additions or remodeling done without permits
Non-permitted work might not be done up to local building codes. You can not trust contractors doing the job correctly. That’s why you have city inspectors that sign off on it. Also, homeowner’s insurance might not cover un-permitted spaces and if something causes a fire, insurance will not cover the damage if the root cause was due to un-permitted work, i.e. bad electrical wiring. It has also impact on any future projects. When you apply for the next permit for something you want to add or change, the city inspector may check prior permits and they may require you to tear out any un-permitted construction, i.e. tear out dry-walls to inspect studs were placed 16-inces on center. In the end, the penalties for un-permitted work may be quadruple for the cost of a permit, not even considering any rework. Finally, a home appraiser will not include an addition without a permit in the final square footage.
2. Never buy a house with a bad layout
If nobody wants to live in this house, it will be hard to sell it. For example, if getting to a bedroom requires to go through another room may not be the most desirable situation as all bedrooms should be easily accessible through a central hallway. Nobody wants others to pass through their bedroom to go to the bathroom or other bedrooms.
3. Never buy a house without a tub in at least one bathroom
This is a very common mistake because most people take showers. Houses with standing showers are popular with older kids and adults but you will loose a huge market when trying to sell the house later to families with little kids or older family members that need to sit down to bathe. Always have at least one tub in the house even though you’ll never use it once your kids grow up. Having tubs is not a negative but not having them is.
4. Never buy a house without master bathroom inside the master bedroom
When master bathroom is outside in the hallway they become grab for all including your kids, visiting friends and family. Nothing like getting up in the morning and having to share your bathroom with everyone!
5. Never buy a house without checking if it is in a flood zone
Flood insurance can be expensive. Use your county floodplain maps or FEMA to check if the house you are interested in is in a floodplain.
However in rare cases some homes may be marked for flood zones due to outdated or incorrect flood maps. There is a company that direclty works with FEMA and can give you a free consultation on whether your home may be incorrectly marked for a flood zone. If you are paying for flood insurance while your house has never flooded and never had a flood claim with FEMA you may be paying unnecessary flood insurance costs. Check out the National Flood Experts to get a free consultation on your property. If they find your property is incorrectly marked, they charge $500 for residential and $1500 for commercial property (at the time of this writing) to nullify the flood zone requirements. They also provide 100% money back guarantee if for any reason it doesn’t go through.
6. Never buy a house with a negative back up
Power lines, train tracks, strip clubs, liqueur stores, neighbors’ messy backyards are not desirable properties. Instead look for homes that back up to something positive like a golf course, a lake, a pond, forest, a creek – all these will give you higher resale value.
7. Never buy a house using other people’s resale numbers
Do your own home work and always double check the comparable property values in the neighborhood or within a close proximity. Don’t trust the wholesalers, they tend to inflate the resale value of the property.
8. Never buy a house with structural issues
Large cracks in a foundation or house on a steep incline should be inspected by a structural engineer before proceeding. Structural integrity repair may be very expensive. Use your due diligence period to do these inspections before you buy.
9. Never buy a house with a shared driveway
Shared driveway or shared headache? Most buyers pay little attention to driveways when looking at homes but when it comes to shared driveway, one should. They are common in many neighborhoods and when maintenance is shared equitably and neighbors remain on good terms all is well, but that’s not always the case. The most common forms of shared driveway is when it is shared equally by multiple owners or when one owner owns the driveway and allows another land locked owner to use it for access via an easement. In all situations, the buyer should examine the legal agreements of the driveway to understand what will be their commitment and consult a real estate attorney to make any amendments with the existing owners before purchasing the property. Remember, we can’t choose our neighbors and a good agreement may be just the right contract you will need if you have to take them to court to resolve a dispute.
10. Never buy a house without reading the Restrictive Covenants
If you want to setup a business like watching other people’s dogs, the restrictive covenants may prevent you from doing so. Can you build a fence, what type of fence, other of structures, how many pets you can have, whether you can have chickens, maintenance of your landscape and others are all restrictions that may be spelled out in the Subdivision Protective Covenants also known as Restrictive Covenants or Deed Restrictions. The HOA may take you to the court if you don’t comply. Your neighbors can take you to the court if there is no HOA. The courts take Restrictive Covenants very seriously and can impose daily fines until the offensive element is removed.
Why do we have them? A developer establishes limitations on land use through a reference to a separate recorded declaration, called Declaration of Restrictive Covenants. When a property is conveyed to a new buyer, the Warranty Deed the owner signs refers to the plat and declaration of restrictions and incorporates these restrictions on the title conveyed by the deed. The restrictive covenants are hence included by reference in the deed and become binding on all parties. In the end, the protective covenants protect neighbors and their property values by maintaining common standards across the entire subdivision.
11. Never buy a house near a river
When you inspect nearby tree trunks, the white line is indicative of the water rise since the last flood.
12. Never buy a house with a basement or a slab foundation that sits on the lowest plain
Homes below the street level or on a bottom of a down-slope from other homes in the neighborhood may get more water and the water may not drain properly or quickly enough. Water doesn’t flow uphill so examine the landscape of the property especially if it has a basement or slab foundation.
13. Never buy a house without a title insurance
A property can have surprising liens that convey to new owners. These can be in a form of past mechanics’ liens for unpaid material or contractors’ bills, real property tax liens for unpaid taxes, mortgage or deed of trust liens for unpaid loans, judgements against the property, personal property tax liens, state tax liens and federal tax liens. Always have the title examined by a licensed attorney or a title company for any title defects and always carry a title insurance against any losses sustained as a result of defect in a title that existed at the time the policy was issued.
14. Never buy a house located on an ancient Native American’ burial site
It won’t be just the ancient ghosts that will be haunting you! Rather, you’ll have to live with all the modern property restrictions and regulations.
15. Never buy a house with Lead based Paint
Homes built before 1978 are likely to have lead based paint on walls, ceilings, windows, stairs, railings, banisters and porches. Lead from paint, including lead dust is a common form of lead poisoning. Lead poisoning occurs when lead builds up in the body, often over months or years. Children younger than 6 years are especially vulnerable to lead poisoning as it can affect their mental and physical development. At very high levels, lead poisoning can be fatal.
Typically, older homes have been repainted with safer unleaded paint which remediates the surfaces. However, if there is any large remodeling or demolition planned, then one needs to be aware of lead dust particles and use precaution in dealing with lead. Hiring external help is always the best choice as home improvement contractors are required to be trained and certified in methods of containing and cleaning up the lead dust. EPA implemented rules for dealing with renovations of areas containing lead such as: covering surfaces where lead dust could settle with plastic sheeting. In addition the plastic must extend beyond the work area by six feet in all directions and misting of water is required while working to keep the dust down. No demolition can be done that would spread debris such as breaking wall materials, etc. with a hammer, instead these surfaces must be gently broken apart in other ways. All power tools that cut, sand or grind must be hooked up to a vacuum system with HEPA filter and heat guns may not exceed 700 degrees Fahrenheit to keep lead dust and fumes out of the air. At the end of the job, a contractor is required to test the site to ensure no lead residue remains on surfaces such as windowsills, walls, countertops and floors. A record of the job must be kept by contractors for 3 years to prove all work was done in accordance with EPA approved rules and regulations.
16. Never buy a house with just one bathroom
Everyone needs a backup. Homes with one bathroom are no longer practical. They are hard to rent and sell. Unless it is in a neighborhood with similar homes, I would recommend to shy away from it.
17. Never buy a house with one car or no garage
You eliminate large market when trying to resell it or rent it out later.
18. Never buy a house with well and septic in a city
if the rest of the neighborhood isn’t. Do you really want to drink the groundwater under a city?
19. Never buy a house close to a school
Whether it’s an elementary, middle or high school they all have heavy morning and afternoon traffic with long lines causing road congestion. On the flip side, if you do have school age kids you will save lot of time and gas as your kids will be able to walk to school and back home. In general, there are few school campuses that have all three schools nearby, but if they do that may be convenient strategy for 12 years of schooling!
20. Never buy a house that has outdated electrical wiring
Without checking the fuse box and removing an outlet cover to inspect the wiring on an older home, you won’t know what is hiding behind the walls and potentially not even your inspector. Is it an aluminum wiring used in residential construction in the 60s through 70s or is it the old 2 prong without a ground? Both are fire hazards and no longer up to current building code. Please have an electrician check the wiring on homes built before 1980 before you buy the house unless the house was gutted out and rewired. You can ask the seller for county inspection reports and they will typically send you to county’s website with link to all inspection status. Aluminum wiring can overheat to 270 degrees Celsius (water boils at 100 degrees Celsius) and is 44 times more likely to cause fires than the recommended but more expensive copper wiring. Rewiring a house can be expensive as dry walls and ceilings may need to be removed adding to that the cost of copper you are looking in excess of $10,000 to rewire your house.
21. Never buy a house with Asbestos
The “magic mineral”, “evil dust” are just some of the more common names given in the past to Asbestos which literally means “inextinguishable.” Asbestos has been traced back thousands of years, within clothing, pottery and log homes. It is naturally fire resistant and heat insulating. Asbestos was banned in 1978 but there are homes built through 1985 that have used asbestos as a fire retardant and an insulation throughout: in tile, walls, ceiling, around pipes, on roofs, etc. Asbestos in its intact form is not dangerous. However, any disturbance to material with Asbestos releases dust particles that can scar lungs tearing the lining causing a serious, chronic, non-cancerous respiratory disease that is not curable. Because Asbestos is only harmful when disturbed, if you are planning to make any remodeling changes to homes built before 1985 first have them inspected to determine what all surfaces and materials have Asbestos and plan for extra cash to hire professionals in Hazmat suites to safely remove it before proceeding with remodeling.
22. Never buy a house that has anything but copper or PVC pipes
Polybutylene pipes also known as “Poly pipes” were used in homes built between 1978 through 1995. They gained popularity from the previously used more expensive copper pipes due to lower cost and heavy advertising campaign as “the pipes of the future.” Poly pipes are notorious for leaking causing potentially a catastrophic damage with a single leak. We have seen homes with more than $100,000 in damages from a single leak. Polybutylene has been used continuously in Europe since the 1960s and meets EU plumbing code standards. Polybutylene piping is made to today at 5 different manufacturing plants in Europe. The class action lawsuit in the US revolved around cheap Acetyl plastic fittings made by Delcon, which plumbers used with Polybutylene in the early years. The fittings cracked easily and chlorine/hot water attacked the plastic. They began leaking after 5-8 years. Once this was discovered plumbers began using metal fittings. Later they did away with fittings all together and used Manifold systems so each plumbing fixture (toilet, sink) got it’s own dedicated water supply from the manifold to the fixture with a continuous length of piping without elbows or tees like in normal branched plumbing techniques. There was never a problem with Polybutylene in Europe because they never allowed plastic fittings and had higher connection standards
23. Never buy a house with water heater tank in the attic
unless you plan to spend $3500-$4000 to replace it with a tank-less on-demand water heater as soon or before you move in. Also, inspect around the water heater for any prior water damage. A 50 gallon tank water heater will overflow the pan and cause damage to the attic floor, insulation, drywall and flooring below. It’s on the top list of insurance claims in homes build on slab foundation or with basements. A 50 gal water heater tank is a big eye sore and attic is the perfect place for builders to “hide” it.
24. Never buy a house if it is the biggest house in the neighborhood
If the average house in the neighborhood is 1,500 sqft and you are looking at 3,000 sqft house, its price per square foot will be considerably lower than the average. However, it’s not a direct price per square foot conversion as odd balls in the neighborhoods are always the hardest to sell.
25. Never buy a house without comps
It is too risky to buy a house that has no comps as houses should be bought based on comparable price, location and facts. You may have a hard time selling it.
26. Never buy a house used for cooking meth
For methamphetamine also known as ice, the cleanup cost can be between $10,000 to $25,000 depending on the size of the house and surfaces affected and as bad as complete tear downs for extreme cases. Use your Due Diligence Period to talk to the neighbors and find out who lived next door. You can also buy a test kit for $50 to test for any meth residue if you have any suspicion. Here are 5 signs to look out for:
- Yellow discoloration on carpet, walls, drains, sinks and showers
- Blue discoloration on valves of propane tanks and fire extinguishers
- Taped off or removed fire detectors
- Punched doors or walls usually triggered by anger under the influence
- Strong odors residual of cat urine, paint thinner or ammonia
If you already live in a new and are having the following health symptoms like diarrhea, dry mouth, mouth sores, metallic taste, headaches and burning in your eyes you may be living in a home with chemical residues of a meth lab.
27. Never buy a house with LP Tank
Also known as Leaking Petroleum Underground Storage Tanks are underground oil tanks found in older homes that may leak and when they do are an environmental hazard. The cleanup and removal cost is anywhere from $10,000 to $130,000 according to the EPA. If underground water has been contaminated the cleanup cost can be in the millions. Normal removal of an underground oil tank costs about $2500. Please don’t confuse underground Oil tanks with underground Propane tanks. The later is a gas and if it leaks you’ll hear a hissing sound – it is highly flammable and dissipates in the air if not ignited.
28. Never buy a house you can’t afford
House as a primary residence is a liability, it is not an investment by any means. Yes, it appreciates in value if in the right location but it doesn’t provide a monthly income, rather it is a liability. Don’t become a statistic, consider what happened during the mortgage crises in 2007-2008.
29. Never buy a house if your gut tells you otherwise
Don’t put yourself in that situation as 9 out 10 times your gut may be correct.
30. Never buy a house as an investment
if you don’t want to worry about 99% of the items listed above and the headache of dealing with tenants, you could always invest in land or other tenant-less real estate.
Other factors that come into play are mold, zoning and any planned changes, proximity of land fills, for some nuclear plants and power-lines, neighborhood crime rates as well as rush hour traffic pattern. All these can be looked up online but the list is quite long and working with a responsible and caring realtor will help you identify them and narrow your choices.