Haunted Home Histories: What To Ask Before You Buy

Investor's Business Daily

Houses, townhouses and condos have histories: a genealogy in the builder, a medical record in repairs and remodels, and a social network in all the neighborhood details.

Prospective buyers would be wise to investigate a property's past. With the many resources online today, sleuthing is easier than ever.

Experts say a proper background check includes not just a structural inspection, but looking at remodel permits and builder information, crime and neighborhood stats and the rules and finances of the homeowners association, if applicable.

Every buyer "should have full information before they make the decision to buy or not," said Paul Bishop, the National Association of Realtors' managing director of research.

Top-To-Bottom Inspections

Of course all buyers should do a home inspection and title search, including verifying square footage and lot lines, checking possible easements, and investigating location issues like flood maps, earthquake zones and steep hillsides.

"A lot of people just don't know all the additional things they should be checking," said Craig Milliken, president of CPM Real Estate Inspections in Boca Raton, Fla.

He says beyond home inspections, roof inspection should be standard, especially in storm-prone areas like Florida. After Hurricane Wilma in 2005, he says, contractors did many roofs without getting permits first.

Not only could those roofs be faulty, they may make the home uninsurable. Also, "the age of the roof has a lot to do with the insurance premium," Milliken said. And a roof replacement is a sizable expense.

Foundations also must be inspected. "If your home inspector doesn't crawl under the house, you need another home inspection," said John Fryer, a home inspector with Fryer Consulting in Oakland, Calif.

Home inspectors advise buyers to visit the local building department and review all the permits issued on a home. A remodel done with no permit may include shoddy or improper work that may have to be redone. If more remodeling is on the buyer's agenda, the previous unpermitted work can complicate matters.

"Usually the building department instructs the owner to then hire an architect or engineer to certify that everything was done in compliance with the current code, not the code (as it existed) when it was done," Milliken said. This step can require more remodeling and costs than a buyer bargained for.

With all the flipping in this housing market rebound, buyers also need to beware of pretty homes that disguise poor workmanship.

"Permit history is pretty important, particularly in this age of flips," Fryer said.

He recently inspected a flip that had two significant problems: poorly patched stucco and improperly installed vinyl replacement windows. The windows are screwed through the bottom sills into the frames, "which will create leaks," he said.

And the flipper used "OSB (oriented strand board) under the stucco patches with no building vapor barrier." OSB is a cheap material that "rots quickly when it gets wet," Fryer said. Without the vapor barrier it's likely "the patches will leak.

"It's a gorgeous, prettied-up flip," he said, but has "shoddy repairs.

Home warranties can help with failing appliances and the like, but typically don't cover construction defects. Unlike new builds, flips lack any construction warranty.

Questions To Ask

On a newer home, finding out the builder's name also may be useful. Many building departments now have records online, so a buyer can look up a home's building date and name of the contractor, Milliken says. Then other resources can shed light on the builder's reputation and sometimes litigation history.

Places to check include the Better Business Bureau, AngiesList.com, long-time real estate agents and the state's contractor licensing board.

Every prospective buyer of a condo or home in an association should pose five critical questions to the homeowners association (HOA), according to Patrick Hohman, an HOA board member and author of "Condos, Townhomes and Home Owner Associations: How to make your investment safer.

Here's what he says to ask:• Has it done a study to estimate maintenance costs and operating reserves (are reserves funded)

D oes it have FHA approval, which looks at reserves, insurance, delinquencies, lawsuits, proximity to a flood plain, etc.

Is it proactive on maintenance

Who do you call for questions about maintenance or HOA rules? (The answer tells you if the association is self-managed, managed part-time by an offsite manager or has full-time, onsite management.)• What are the house rules, especially picky ones such as HOA fee collection policies, pet rules, or architectural and rental restrictions

Buyers also should ask what kinds of insurance the community carries and if it's all up to date. Also, are there any neighbor disputes involving the home or condo? And does the association have any amenity or other construction plans

Neighborhood Knowledge

Home and condo buyers also should research their possible new neighborhood. Of course if you have kids you want to find out about the school district. But what about crime? Two sites that offer crime data online by community and address are SpotCrime.com and NeighborhoodScout.com.

SpotCrime offers crime alerts and data online "free to the public ... on arrests, arsons, assaults, burglaries, robberies, shootings, theft, vandalism and other incidents," said Colin Drane, the company's CEO.

A local planning department can say if infrastructure construction is coming to a neighborhood. New parks, shopping centers, water lines, etc., can all affect property values, both positively and negatively.

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