Question To Ask A Seller Before You Write A Contract To Purchase A Home
Building Plans...Ask the owner where the original building plans are!
Building plans can often be obtained two ways. The easiest is the current homeowner. A blue print company will make you a copy of their originals. The other way is to check with the local building department. They usually have a copy on microfilm. You'll see valuable information on the plans like:
- Who designed the structure and what year it was given a permit to build.
- Who engineered the structure and possibly to what wind speed tolerances.
- Who built the structure and what was that builder's trademark or possible issues.
- Hurricane tie-down strap details.
- Whether the structure is block or frame.
Tip: Compare the existing structure with the plans on file. This will give you an indication if remodeling was done and if so, make sure a permit was pulled and closed out.
Does the new home have an updated electrical panel? Most homes have 150-200 amp electrical services. Your home inspection company will advise you about your electric service and wiring and estimate any necessary repairs to bring the home up to current code.
Survey...Getting what's yours and not your neighbors
A survey is a geographical written description of where your property in located on planet earth. Lenders require a new survey of the subject property before closing. The reason is they want to see if your proposed purchase is sitting on the right property and adhering to all local required building setbacks. If the builder built the structure without having a qualified layout person or survey crew, it is possible to have half of the structure on the subject property and the other half on the neighbor's empty lot. This has happened many times and creates a nightmare for everyone. Needless to say, the value of the property is not what was bargained for. More common issues are: (1) The neighbor's fence or tool shed on your property; (2) Unrecorded easement which was missed on a past title policies. All of these uncertainties can effect where a structure can be built on the new property.
Closed Permits...Make sure a permit was pulled and closed out
Homeowners at times do minor construction projects without a permit. If not properly permitted, the value of the improvements could be best characterized as "black market" improvements and therefore not worth full value as if they were properly permitted and constructed.
A similar concern to a buyer is making sure the permit for construction was properly closed by the current owner. If an improvement has not passed its final inspection, it is often a simple matter of calling in for a final inspection to the building department and meeting the required codes.
The reason for building permits is to ensure that a licensed professional has done the work and that all codes have been met.
If you find yourself with a home that has gone through significant improvements without a permit, then you could contact your local building department and request a retro-inspection.
- Have the Home Inspection Company ensure the pool pump is properly grounded. This can be dangerous if not done and slightly costly to rectify.
- If the pool is 5 years or older, check the condition of the pool's surface. Poorly maintained chemical balances can cause premature aging of the surface. Re-surfacing a small pool can be $1,500 and larger residential pools can cost near $3,000.
- Leaking pools are not as common but can be costly to fix if present. An analysis of the sellers' water bill might reveal a leak. This is not a defect easily found by a Home Inspection Company. The seller will likely not pay for a separate inspection by a qualified and licensed pool company as a customary cost to sell, but, if the buyer includes this as a condition of purchase in the contract, then they seller may do it.
Seller's Disclosure... Seller must disclose all material known defects in the home
The best way to accomplish full disclosure from the seller is to have the seller fill out a "Seller's Disclosure Formâ€. This form breaks down items in the home into a format that is easy to follow. If the seller signs this form and misrepresents the property's condition or hides known defects, then you as the buyer have recourse in the form of a lawsuit to compensate for your loss of represented value.
Termites and Termite Damage
- Look for wrinkles along the baseboards. This is often caused by termites, which are eating the wood but leaving the paint as the sole structural element of the baseboard. Tap on the suspect looking areas and see if the material is solid or hollow. A special mallet is available that detects rotten wood by the sound of the knock. The problem is, the homeowner might take offense when you break out your mallet and start tapping on their home.
- Look for droppings in cabinets, attic spaces and along window sills. Droppings would be a sure sign of termite issues.
- Be present during the home inspection, especially when the termite company does their inspection. Even though bribes are few and far between, it is best to be there.
- Use a bonded termite company.
Title Insuranceâ€¦What's on the Title?
Before you close, the lender will require a Buyer's Title Policy on the proposed purchase to protect the lender's interest (mortgage amount). This policy cost is typically 1% of the purchase price and is issued by a real estate lawyer or title company. It insures against adverse claims against your property once you take possession. If you are paying cash, a real estate lawyer will demand that you purchase this policy. Not because they make a profit on the policy (this is one money making tool of the trade) but because without a title policy, there's no one to guarantee what you buy is not going to be subject to a lawsuit sometime in the future. Unpredictable things happen all the time behind the scenes. What if the husband died 10 years ago and gave a life-estate to his surviving wife, which upon sale or death, the property reverts back to the family (his family) trust. Unbeknownst to the seller (she forgot about this life estate thing), she sells the home and you buy it. If you have no title policy in place to ensure "good title," then who's going to defend a claim from that trust? Of course, you are! You could sue the seller if there is any money left but what if the seller sold because she was broke and the sale proceeds just covered the first, second, home equity line and other costs? Title insurance is in your best interest.