Tag Archives: custom built homes

What happens when builders can’t get financing?

Source: Real Estate Professional – by Neil Sharma10 Nov 2017

In the wake of Castlepoint Numa’s announcement that it failed to secure financing for Museum Flats, the highly touted and anticipated Junction Triangle condo development, many purchasers feel like they’ve been left hung out to dry in a market that’s grown more expensive.

By one purchaser’s account, this is the second time Castlepoint has informed his family that it will not be completing a development.

According to Akshay Dev, a sales agent with REMAX Realty One, researching builders is paramount. If he’d ever encountered a builder who failed to secure financing, he’d steer clear of them.

“I haven’t had a situation like that in my portfolio yet, but definitely before we get into projects I like to do some research about the builder to make sure they have a certain reputation, background and that they have credibility,” Dev told REP. “Some builders I like working with, and some I keep my paws off.”

Dev is frequently invited to development launches, which are good places to conduct due diligence. He likes to scrutinize the builder and their past projects, as well as determine whether or not problems could arise at any point during their latest build.

He added that, because banks typically provide financing when a development is 70% sold, a developer unable to secure financing might hint at other problems.

“If a builder is pulling out of a project, it means they lack credibility right there,” he said. “If a developer cannot achieve [70% sales], it means there’s something wrong there. Either the project or location aren’t good, or they don’t have the experience to handle the whole situation.

While Dev hasn’t had a builder fail to bring a project to market, he would tell his clients not to renegotiate with them for a relaunch, or even buy a unit in a future project.

“I would advise them to walk away. If they reached a point where they haven’t gotten financing, there’s a lot more involved in this. If you’re going to talk to a builder about getting financing, what is the guarantee that they’ll get it, and what’s the guarantee there won’t be problems afterwards? It’s a credibility issue right there and then.”

Zia Abbas, owner and president of Realty Point, agrees with that sentiment, and added that, as a sales agent, his reputation is on the line as well.

“As far as I’m concerned, whenever I go and sell any product to my client, for me the credibility of the builder is as important as the location of the project,” said Abbas, adding a builder’s credibility is in their portfolio. “What if we find the best of the best location but the project won’t proceed because the builder doesn’t have the reputation?”

Abbas admits that some builders he’s spoken to have said that they could pull out of the project and bring it back to market at higher price points that better reflect Toronto’s hot market, they wouldn’t sully their reputations that way.

“They’ll stick with the promises made, and this is what is called credibility,” he said.

But that doesn’t mean unscrupulous builders never give in to temptation.

Such builders don’t just damage sales agents’ reputations, they also lose the latter money.

“I’ve never worked with these builders and I’m not going to work with any builder with whom I’m not comfortable because the money I’m making on commission is all future commission,” he said. “There would be nothing in my hand. What if the project doesn’t go through? I’m going to lose time, money and credibility in front of my client.”

Abbas has been selling in throughout the GTA for a long time and says he’s had a couple of builders pull out of projects. Clients’ deposits were returned with nominal interest. As a veteran sales agent, he knows how to keep builders like that at arm’s length.

Toronto city councillor Ana Bailao recently went on record as saying that there needs to be more protection for purchasers like the ones who won’t be moving into Museum Flats.

Dev agrees.

Purchasers’ deposits are held in trust, but there have been cases in the past in which rogue builders and lawyers took off with the monies.

“Anybody who has invested money in real estate is investing hard earned money,” he said, “and hoping to grow that money and take their net worth to next level. We need to make sure wherever they put their money is safe. If they invest in certain people who don’t have a proven track record, then they are risking their investments. If you go to credible builders, chances are your money is safe, your project will be completed, the builder will get financing and deliver you a quality product. And with the right market conditions, you’ll get a good return on your investment.”

Advertisements
Tagged , , , , , ,

Consumers find they need help making the best choice for their home. To facilitate this process, we’ve come up with 10 consumer-friendly tips for selecting the ideal fireplace.

  • Decide on the fireplace’s main purpose: Is it heat-efficiency, aesthetics or a combination of both? By communicating this information to the sales person, your options will narrow and your selection process will become much easier.
  • Avoid choosing a fireplace with the intention of heating more than one room. Trying to save on heating costs in this way will result in an overheated main room, forcing you to keep the gas fireplace off much of the time.
  • If you are looking for heating efficiency, consider a thermostat-controlled, self-modulated fireplace. This way, the fireplace will automatically turn up and down while regulating the room to the temperature you desire.
  • Research the trim options to determine which would best suit your décor. Once you have decided on a specific fireplace insert, ask the sales person to review the trim designs that are available. Often the brochure will feature options not seen in the showroom.
  • View the fireplace while the flames are inactive—not just when they are turned on. Since the fireplace won’t be running 24 hours a day all year long, it’s important that you are sure you like how the unit looks when it’s not fired up.
  • Avoid choosing a heating insert that relies on a fan to push the hot air out into the room. The best fireplaces are efficient without a fan. Using one does help with circulation but will only marginally improve the heat output and there will always be some noise. If you do have a fan, make sure you have a separate control for it so you can turn it up, down or off, as needed.
  • When choosing a decorative log set, choose one that easily fits into the fireplace area and leaves some breathing room. Having ample space around the log set looks better and ensures that the valve will not overheat.
  • Determine how you want to operate your gas fireplace. There are a number of options available, including wall switches, remote controls and thermostats. You can also operate many fireplaces manually.
  • If a gas fireplace is not an option, consider an electric fireplace. Electric ones are now available in a variety of sizes and styles with lots of different trim options. They require no venting, so you can install them anywhere in the home.
  • Find a fireplace retailer who will arrange to have a licensed and insured HVAC contractor take care of the installation. How the fireplace is installed can impact its overall efficiency operation and durability.

Source: Reader’s Digest – By Steve Maxwell

Tagged , , , ,

Miles apart: suburbs vs. city

Two couples, four downtown jobs, two different lifestyles. As more Canadians trade off affordable homes for longer commutes, we spend a day in the life of two families travelling different roads

This is a tale of two families: the Lee-Wongs, who live in Toronto, and the Fuscos, who live in a suburb east of the city. Mornings see both families engaged in the same rituals as millions of other Canadians. Alarms go off, children are roused, breakfasts are eaten and lunches packed. There are car keys and transit passes to locate, and phone calls to confirm that grandparents will be there for after-school pickups. Then comes the last-minute scramble to make sure everyone gets to school and work on time. What makes these families different is how far the parents travel to their jobs in downtown Toronto. For the Lee-Wongs, the city core is just 13 km away. For the Fuscos, it’s a 100-km round trip.

Jimmy Lee, 32, works in IT at a major bank. He could take the subway to work, but he likes a guaranteed seat, so he pays $3 extra for the GO train (the regional commuter transit service). His trip takes 45 minutes, door to door, and he often uses the time to catch a quick nap. Jimmy’s wife, 37-year-old Tracy Wong, is an optometrist who owns her own practice and also works in another medical office. Half the time she drives to Etobicoke, a neighbourhood in Toronto’s west end, and half the time she rides the subway downtown. It takes her between 45 minutes and an hour, depending on where she’s headed. Their commuting costs are about $4,080 a year.

suburbsvscity

The Fuscos take a much longer route from their home in Ajax, a city of 90,000 people east of Toronto. Kelly, 37, is a nurse who switches between early morning, day, and night shifts. She drives to the downtown hospital district, and while a 7 a.m. or 7 p.m. start isn’t great for her sleep patterns, it does cut down on time spent in traffic jams. Commuting takes her up to 90 minutes. Antonio Fusco, 42, works in IT at the Hockey Hall of Fame and takes the GO train, a one-hour ride that costs $220 a month. If Kelly has time, she’ll drop him off at the train station; otherwise, he parks their second car at the commuter lot. Getting to work costs the couple about $6,600 a year—over 60% more than the Lee-Wongs pay.

What the Fuscos pay out in transportation, they save in housing costs. Their three-bedroom home in Ajax cost them $154 a square foot when they bought it seven years ago (it’s worth an estimated $213 per square foot today). The Lee-Wongs, on the other hand, paid $280 a square foot for their four-bedroom place four years ago, and it’s now worth at least $368. Their mortgage payments are $3,200 a month, twice what the Ajax family shells out. Families who live right in the downtown core make an even more dramatic trade-off between commuting costs and housing: two years ago, my husband and I bought a home four km from Toronto’s core. We spend $1,625 a year commuting by bicycle, public transit and occasional car sharing. Not including the finished basement, our house is worth about $518 a square foot.

For all the crunching of numbers, there’s a long checklist of factors people consider when choosing where to live. Balancing the size of the home one can afford with the time and money spent travelling to work is important, but so are school quality, crime rates and access to grocery stores and amenities. There is no one perfect neighbourhood that would suit every family—both the Lee-Wongs and the Fuscos say they’re happy and that they wouldn’t trade the city for the suburbs, or vice versa. Still, we wanted to look at the financial implications of each choice.

The Personal

“We wanted to start a family, so we needed space to grow,” says Kelly about the move she and Antonio made to Ajax seven years ago. “I like to have a big backyard.” Before they married, the Fuscos rented an apartment in Toronto’s lively Greektown. They liked walking to restaurants and boutiques, and they really liked the quick subway trips to their downtown workplaces.

When they began thinking about having kids, however, it soon became obvious that houses in their urban neighbourhood were out of their budget. Kelly grew up in Scarborough, in the city’s east end, but even that was out of their price range. So the couple decided to move to the suburbs.

“It was a little hard in the beginning,” says Kelly. “Ajax had just started to grow, and we had to drive everywhere. But now we can walk to a lot of little bakeries and shops.” One great benefit of the move was that they were now only a 20-minute drive from Kelly’s parents, who live in the town of Brooklin. This became extremely handy when the couple had their first daughter, Sofia, four years ago. Their second daughter, Tania, is now two. The Fuscos currently pay nothing for childcare: in the morning, Sofia goes to kindergarten and Tania to free nursery school. Kelly’s schedule means that she’s off work some afternoons; otherwise, her parents handle the babysitting.

The Fuscos don’t mind the trade-off: they feel that extra time spent travelling to work allows them to enjoy more space at home. In fact, the family is moving even farther out this spring to Brooklin—an added 18 km from downtown Toronto, but just around the corner from Kelly’s parents. “We’re getting a much bigger house without a huge increase in our mortgage,” says Kelly. “We love the area, even if it’s a further commute.”

Distance from grandparents was also a major consideration for the Lee-Wongs. Jimmy grew up in North York, on the subway line above the city centre. He knew he didn’t want to move very far after he married Tracy, a Hong Kong expat, eight years ago. “My parents are older and my dad has Alzheimer’s,” he explains. “I need to be there to help my mom out.” It’s a mutually beneficial arrangement now that the couple has a three-year-old: most mornings, Tracy drops their son off at a Montessori school, and the Lee grandparents are responsible for the 3 p.m. pickup. Childcare costs the family $1,000 a month.

The couple’s first home was a condo just minutes from the North York office where Jimmy was working at the time. When they decided to buy a house, Tracy and Jimmy assumed their budget would lead them to the suburbs, not too far from Jimmy’s parents, but far enough out of Toronto that prices would be lower. The couple had bid and lost on two houses just north of the city boundary when a buyer offered them a great price for their condo. They sold it and moved in with Jimmy’s parents, then kept up their real estate search for a year and a half, still focusing outside of the city.

Then a house went up for sale one street over from Jimmy’s parents. The price was about 20% higher than the couple had budgeted for, but homes in the neighbourhood don’t go on the market very often. They decided to pounce. Built in the 1960s, the house needed major renovations, and Jimmy and Tracy had contractors strip it down right to the drywall. The move turned out to be more expensive than they expected. “We bought beyond our means,” Jimmy says. “But we have a philosophy—live now. We’ve seen a lot of family and friends saving, saving, saving to pay off the house, and once they do, they kick the bucket a year later.” Tracy and Jimmy are both ambitious in their careers, and they have no non-mortgage debt. They feel comfortable enough with their finances to take two vacations a year.

Jimmy says he’s happy the family decided not to move outside the city, even though homes there would have been much more affordable. “North of Toronto isn’t the suburbs anymore—it’s another city, and traffic is just as chaotic. We have friends that live up there and it takes them 30 minutes just to get close to downtown.”

The Financial

Most people assume that living in an urban centre like Toronto is sure to be more expensive than life outside the city limits. We asked Alfred Feth, owner of Feth Financial Services in Kitchener, Ont., to look at both families’ income and expenses to see if that held true.

“If we just take these two families, it’s definitely cheaper to live in the suburbs,” says Feth. “But there ain’t a lot of difference.”

The higher amount the Fuscos pay out in transportation costs is still less than the difference between the families’ housing costs. But mortgage payments are the only dividing factor: both families pay property taxes that work out to about $2.40 per square foot of house.

The other big difference is the cost of childcare. While the Fuscos get free childcare from Kelly’s parents, most others aren’t so fortunate, whether they live in the city or the burbs. According to Statistics Canada, the average family spends $3,500 a year in childcare—but that number isn’t very useful, because it includes everything from occasional babysitting to live-in nannies. No national organization keeps stats on urban and suburban differences, but the topic is a hot one among parents on the online forums we visited. The average cost for daycare in Toronto and Vancouver is about $50 a day. In the suburban areas outside those cities, it’s often $5 to $20 cheaper. But there are huge regional differences: families in Halifax reported finding good childcare for as low as $20 a day, while a few parents from Vancouver quoted prices as high as $80 a day. Feth points out that the Lee-Wongs could save a lot by enrolling their son in full-day kindergarten next year when he turns four.

Feth believes that both of our families are living in homes they can comfortably afford. The Fuscos and the Lee-Wongs both spend less than 35% of their gross salaries on housing, although our urbanites are close to that upper limit. Kelly and Antonio have debts other than their mortgage, including a line of credit and an interest-free loan from their parents. But for Jimmy and Tracy, like many city dwellers, their huge mortgage is a hungry mouth always demanding to be filled. The Lee-Wongs do not make regular RRSP contributions because they put all of extra money towards their home loan.

While real estate is the largest single investment most Canadians make, Feth cautions people not to rely on their houses as a retirement plan. The federal government has tried to discourage buyers from taking on excessive mortgages by eliminating 40-year loans and increasing mandatory down payments. But Canadians continue to pile on plenty of mortgage debt. If housing prices drop significantly—and we’re overdue for a correction—things could end badly for homeowners with huge mortgages.

As well, a house is much less liquid than other types of investments. There’s no guarantee that you’ll receive your asking price when you’re ready to sell, as neighbourhoods that are trendy now might not be so in 15 years. Feth also says that people who use their home as a retirement plan underestimate its emotional value, and how hard it is to downsize. “There’s a huge difference between a house and a home. A house is an investment. A home is where you raise your kids.”

The Bigger Picture

The urban/suburban decision is often framed in terms of time saved in commuting versus the benefits of a bigger home. But that may be the wrong way to think about it. “In equilibrium, the extra commute matches the lower housing expenses, but people live differently,” says Trur Somerville, director of the Centre for Urban Economics and Real Estate at the University of British Columbia. In real life, he says, most downtowners and suburbanites don’t feel like they’re trading space for time. Rather, the choice often comes down to personal preferences. Some people want a backyard big enough for a hockey rink, while others see extra bathrooms as just more to clean.

Hardcore city dwellers might not understand that many families genuinely prefer living outside the city. “There’s a snobbery that you have to turn the clocks back an hour and put your mom jeans on when you move to the suburbs,” says Sarah Daniels, one half of the real estate team that hosts HGTV’s Urban Suburban. “But my clients are generally surprised at how much they like it. They realize it’s all people like them, who came from the cities.”

Her statement is backed up by data—the 2006 census showed that more people are moving out of Toronto, Vancouver and Montreal to the surrounding suburbs than the other direction. Most of the people moving are new parents aged 30 to 34.

Daniels says that the growth of businesses in former bedroom communities now means it’s easier to make a living outside of the city core. Even the term “suburb” is up for debate—developers hate it, preferring to market new communities as all-in-one urban areas. This is in part to avoid the stigmas still attached to the burbs, but it also reflects the reality that lots of people in these places lead lives that are totally separate from the city.

For suburbanites who do need to commute to downtown, however, traffic is a growing complaint. Across Canada, a quarter of workers spend 90 minutes or more travelling to and from work every day, up from 17% two decades ago. Toronto is the worst, with an average commute of 33 minutes one way, followed closely by Montreal, at 31 minutes. The commute in Calgary has increased 14 minutes since 1992. Health researchers have long pinpointed excess time spent getting to work as a cause of heart problems, back pain and stress. Of full-time Canadian workers who took 45 minutes or more to travel to work, 36% told Stats Can that most days were quite or extremely stressful. For people who had a commute time of 15 minutes or less, under a quarter of them felt equally stressed out. And the growth of suburban industry hasn’t eliminated commuting as much as sent it in the opposite direction—morning rush hour in the Toronto area now sees a lot of professionals travelling out of the city as well as into downtown.

Governments aren’t helping: in fact, they are artificially reducing the price of suburban housing by accommodating commuters, says Jane Londerville, an associate professor at the University of Guelph. She thinks regular car commuters should shoulder more of the cost for infrastructure and transportation. “Developers do pay a charge that goes to roads and fire trucks and libraries,” says Londerville, who teaches commerce and real estate. “But if you really calculate the cost of building and maintaining highways largely so that people can get back and forth to work in the city, then those charges really don’t cover the cost.”

Londerville would like to see Canadian municipalities raise money for roads and highways through fees aimed at car commuters. She points to London, England, where there are road tolls for entering the core, and mentions hefty development fees (along the lines of $10,000 a house) dedicated to transportation maintenance. The idea of road tolls has been floated in Toronto, but so far no Canadian politician has had the courage to make it happen.

Increasing access to transit in the suburbs would be one commuting solution that would be cost-effective for users. Jill L. Grant, a professor in urban planning at Dalhousie University, has interviewed plenty of suburbanites who would be happy to take transit to work if they could get a smooth ride with minimal transfers. In other words, a subway. This, unfortunately, is impractical when new neighbourhoods are built specifically so that people can live in single-family homes.

“Subways are not an affordable transit system to service low-density areas,” says Grant, who has studied Canadian development patterns for a decade. Even the loathed, lurching public bus is sometimes too expensive to run through streets of single-family homes. “I remember seeing a sign in a new subdivision outside Calgary that said ‘Future Bus Stop,’” she says. “Developers say these neighbourhoods are designed ready for transit, but the service can’t make ends meet.”

What We All Want

If money is the motive, then the cost of a suburban home is cheaper—although the savings are not as significant as families might hope. If quality of life is equally important, then every family needs to decide based on its personal wish list, whether that includes a backyard hockey rink or a sushi spot within walking distance.

If time is what you’re hoping for, well, that seems to be the working family’s most precious commodity. In 2001, the Public Health Agency of Canada did a survey on families and work, and asked participants what they would spend more free time on, if they had it: time with family; personal time; education; sports and fitness; or work. Nobody said work or education, and most people said family or themselves. “I’d have to say personal time, honestly,” said Kelly Fusco, whose work schedule includes at least one full day on the weekend. “I just do not get any right now.”

“Family time, for sure,” said Jimmy Lee, whose wife, Tracy Wong, spends her Saturdays at work. “By the time my wife gets home from work, my son is usually asleep.” Whether you prefer a big yard or a short commute, it appears that the one thing none of us can buy is time.

Source: Money Sense by Denise Balkissoon March 16th, 2012

Tagged , , , , , , , , ,

6 reasons to use a mortgage broker

6 reasons to use a mortgage broker

1. Choice: If you go directly to your bank, you will only be offered products from that financial institution. Mortgage brokers have relationships with several different lenders and are knowledgeable across each lender’s range of products.

2. Works for you: As small business owners, word-of-mouth makes or breaks mortgage brokers. Hence they are motivated to act in the clients’ best interests.

3. Skilled negotiators: Mortgage brokers’ skill and experience, combined with their relationships with lenders, help them negotiate rates that are often better than what borrowers could achieve on their own. That remains true even in this competitive environment.

4. Goal-orientated: Are you looking for the cheapest rate? Are you interested in paying off your loan sooner? Are you planning on buying another investment property? A mortgage broker will interview you to find out what you want out of your home loan and work to find the best product to suit your needs and home ownership goals.

5. Paperwork: Mortgage brokers help their clients complete and submit the mortgage application, as well as gather the documentation required by the lender.

6. Read the fine print: After you’ve received your loan approval, the mortgage broker can help you understand the document and conditions of the contract. As well, the broker can walk you through the next steps leading up to the closing of the mortgage transaction.

#MortgagesMadeSimple

Tumbler_pms281_print-page-001

Tagged , , , , , , ,

Got $1 million? You might score a tear-down home in a hot market

This three-bedroom uninhabitable Toronto home in "extremely poor condition" just sold for $1.05 million. The selling agent says it's the "new normal" for the neighbourhood.

Got $1 million to buy a house? If you’re looking to spend it in a hot neighbourhood in Toronto or Vancouver, brace yourself. You might end up with a dilapidated home in desperate need of major repairs, or even a tear-down.

A Toronto house in the coveted Beaches area went on the market last week with a hole in the roof, peeling paint, and musty plywood flooring throughout. It had no running water because no one has been living there for years.

It was advertised as “in extremely poor condition” and “currently not livable.”

Real estate agents bringing clients for a look were advised to pack a flashlight and “go at your own risk.”

No matter. The decrepit three-bedroom detached house garnered multiple offers and sold in three days for $1.05 million, more than $150,000 over asking.

‘It’s scary looking’

“It’s scary looking,” comments Kate MacDougall, who lives across the street from the million-dollar mess. She says during her two years in the neighbourhood, “We’ve seen people come and like look in the windows, police and stuff, wondering what’s going on.”

Nonetheless, she’s not startled by the selling price. “Obviously the properties here, people just want them. The beach is right there, it’s a beautiful place.”

“It’s not a big surprise to us,” chimes in selling agent Lindsay Wright. “It’s the new normal for south of Queen [Street East],” she says, referring to the house’s desirable neighbourhood.

It also appears to be the new normal in other sought-after locations where prices are soaring.

In August, the benchmark or typical price for a detached property in Metro Vancouver jumped 17.5 per cent from the year before, to nearly $1.16 million. In Toronto, the typical price for a detached home climbed 12.9 per cent to just over a million dollars.

Million-dollar Vancouver wreck

fixer upper Vancouver real estate

This six-bedroom Vancouver home “fully in need of a complete restoration” just sold for $1.1 million. (CBC)

Two weeks ago, Vancouver real estate agent Shaun Gregory sold a 110-year-old detached house that is “fully in need of a complete restoration. There’s no kitchen, it’s been vacant for the last 10 years,” he explains about the six-bedroom home that borders the city’s Downtown Eastside, known for its high rates of drug use, crime, and prostitution.

The selling price: $1.1 million.

Gregory says the new owner plans to restore the home, and he finds nothing astounding about the sale. “It’s a great emerging area of Vancouver, a lot of development happening around, so I’m not really that surprised.”

The agent with Stonehouse Team Real Estate explains that the lure of cheap mortgages and a lack of supply are driving up prices, even for houses in disrepair.

Vancouver real estate fixer upper

An interior shot of the Vancouver house which hasn’t been lived in for 10 years and has no kitchen. (CBC)

“What we’ve got going on in Vancouver is historically low interest rates and a real lack of inventory, especially in the detached housing market,” he says.

While prices are skyrocketing in strong markets, supply is shrinking. In Vancouver in August, the total number of listed homes declined by a jarring 26.2 per cent compared to the previous year. In Toronto, active listings declined by 10.5 per cent.

The high price of limited land

Ian Lee, a Carleton University business professor, explains that in lower demand regions like rural areas, “the value of the residential property is principally in the value of the house, as land is relatively less expensive.”

But, he says, the opposite is true in urban centres where demand is soaring and there’s a shortage of ready land to build more homes.

The consequence: “The lot is typically much more valuable than the building sitting on the lot,” he says. “This results in a perfectly logical situation where a dump of a home can be worth a large amount.”

Lee says, for example, in Ottawa’s desirable Glebe neighbourhood, a lot is worth on average well over $500,000 while an older, non-renovated house on that land may be worth just $100,000.

‘Perfectly rational’

The business expert concludes that for a developer to pay big bucks for a crappy house on pricey land and then demolish it is “perfectly rational.”

Toronto agent Wright explains that the uninhabitable home she sold sits on a quality lot with a private driveway and a backyard that backs onto a park — all assets that helped command a good price. She won’t reveal the buyer’s plans.

MacDougall believes she has a good idea what will unfold: “I think they’ll just tear it down and build something new.”

Tear-down homes selling for more than $1 million may not be encouraging news for buyers still trying to get into the market. But, for MacDougall, it’s something to look forward to.

Referring to the dismal looking, neglected house, she comments, “Nobody wants to live across from that.”

Source; CBC By Sophia Harris, CBC News Posted: Sep 04, 2015 5:00 AM ET

Tagged , , , , ,

House of Horrors: 6 Things a Home Inspector Might Not Catch

bathroom shark attack

Before buying into a monthly mortgage payment, 77% of home buyers hire an inspector to go through their new digs with a fine-toothed comb. This is a very good idea.

That extra set of eyes gives buyers peace of mind that a new house won’t have a leaky roof or cracked foundation. Or something even worse. But what you might not realize is that countless conundrums go unnoticed during a home inspection simply because the inspector doesn’t look for them.

And those undetected flaws could add up to expensive repairs.

Here’s the deal: Home inspectors aren’t regulated by federal guidelines. Each state has its own licensing and/or certification requirements. They vary from Texas, whichrequires 130 classroom hours of real estate inspection training, to Georgia, which requires an inspector have a business license and a letter of recommendation—and little else.

That means home buyers have to do their own homework to make sure they’re working with a reputable and thorough inspector. Make sure to verify an inspector’s references and ask to review the checklist of items covered during an inspection.

And, once you’ve done that, ask your inspector to check for these budget busters.

Runny appliances

If you’re buying a home for the first time, you’re probably swooning over the idea of having your own washer/dryer or dishwasher. And to make sure your new BFF won’t break—and break your heart—an inspector should run these kind of appliances to check for functionality and leaks.

But inspectors don’t always go over all the bells and whistles on appliances.

“Checking the water dispenser for issues on a fridge isn’t standard,” says Tom Kraeutler, a former home inspector, author of “My Home, My Money Pit: Your Guide to Every Home Improvement Adventure,” and a syndicated radio host.

That oversight could mean you walk into a flooded kitchen if the seal on the water dispenser is faulty or the ice machine springs a leak.

Leaky faucets

To put a home’s plumbing through its paces, all faucets should be turned on; toilets should be flushed multiple times; and drain pipes—even if they’re under the house—checked for leaks while the water is running.

When it comes to sinks, the faucets need to be run long enough to fill them before draining in order to spot a leaky pipe or drain. In the shower, an inspector will need to block the drain pan with a washcloth or rubber jar opener and fill the shower to the top of the “pan” or floor, The water should sit for 15 to 20 minutes to test for leaks in the drain, Kraeutler says.

“That also helps spot if the shower pan is faulty, which is a super-expensive fix,” he says.

Another thing: Leaky shower tiles happen when gaps form in the tile grout or caulk. And they show up only when wet. To simulate showering, the inspector needs to splash his hands under the water and check the integrity of grout and caulk.

Cracked sewage and drainage pipes

Home inspections are always limited to what is visible and accessible, Kraeutler says. So cracks in underground or buried pipes and drain lines will be checked only if your inspector conducts a camera inspection.

That in-depth look into your drain will cost you extra. But the additional few hundred dollars are a drop in the bucket compared to the thousands you’ll shell out repairing or replacing faulty sewage and drainage pipes.

Corroded central air conditioning

Did you know that air-conditioning units can’t be tested in certain temperatures?

It has to be at least 55 degrees Fahrenheit outside in order to run a unit—temperatures lower than that can cause damage to the air conditioner, Kraeutler says. That means inspections done in cool temperatures could have an inspector ignoring the AC altogether.

So if it’s too cold to run the unit, ask your inspector how he looks for potential problems. You’ll want to make sure the inspector examines all connections and looks for signs of damage, says Will Hawkins, owner of All Pro Drain in Austin, TX.

And, if the temperature is 55 or higher, make sure the AC is run for several hours to test the functioning of the unit’s condenser coil.

“We’ve had customers notice condensation or water seeping through the walls in a few hours [of turning on the air conditioner] or overnight,” Hawkins says. “And unless the AC is run for several hours, that’s something a home inspector would be hard pressed to see during his run-through.”

Dangerous DIY improvements

It might be tempting to spruce up your home with some DIY projects before putting it on the market. But if those home improvements are completed with low-quality materials or not installed properly, a buyer could face an exorbitant—and unexpected—renovation.

A DIY renovation could be dangerous, too. If a basement or attic is finished without proper permits, electrical and plumbing work might not be up to code. And that could mean potential damage—or even danger—to the residents.

Although many home inspectors check for construction permits with the local municipality, Kraeutler suggests verifying that step isn’t overlooked.

Damp porches, decks, and balconies

You might not think of decks and balconies as sources of expensive leaks. But costs of damage can surge up to $100,000, according to Bill Leys, owner of Division 7 Waterproofing Consultants and a deck inspector in San Luis Obispo, CA.

“A deck or balcony can also have serious safety issues and be at risk of collapse,” he says.

Asking your inspector about cracks, rusted flashing, and soft areas around drains can help keep water from seeping into your home.

One final tip: Most home inspections are performed at least two months before closing. A lot can change in that time—especially if a house is vacant, Kraeutler says. Consider having a follow-up inspection the day of (or no earlier than the day before) closing to ensure you’re not purchasing a money pit. 

Source: Realtor.com by Gina Roberts-Grey has been covering real estate news since 2000

Tagged , , , , ,