Buying? Twelve
Red Flags That Should Raise Concern
By Michele Dawson
Indeed, more than 40 percent of the previously owned
homes on the market have at least one serious defect,
according to HouseMaster,
a major home inspection company with offices in
more than 390 cities in the United States and Canada.
"Virtually every 'used' home needs some
repair or improvement," said Kathleen Kuhn,
CEO and president of HouseMaster. "That's
to be expected. But with today's high prices,
you want to make sure that you are aware of any
major problems in a house you are considering
purchasing, and what it will take to remedy the
situation."
Drawing from their own findings from more than
one million home inspections, HouseMaster says
the most serious home defects to be on the lookout
for are:
1. Cracked heater exchange
2. Failing air-conditioning compressor
3. Environmental hazards including radon, water
contamination, asbestos, lead paint, and underground
storage tanks
4. Moisture in the basement
5. Defective roofing and/or flashings
6. Insect infestation -- termites or carpenter
ants
7. Mixed plumbing
8. Aluminum wiring
9. Horizontal foundation cracks
10. Major house settlement
11. Undersized electrical system
12. Chimney settling or separation
Kuhn says most of these problems can be repaired.
However, depending on the specific problem, the
cost can be substantial, particularly if the defect
involves one of the major systems. The cost could
become a factor in whether you ultimately buy
the house.
For example, a new air conditioning compressor
could cost you up to $1,200. A new roof or repairs
can cost at least several thousand dollars. A
wet basement could cost up to $5,000 to remedy
If you enter negotiations to buy a particular
house, your agent should advise you to provide
a provision for renegotiating or backing out of
the contract if a home inspector finds major problems.
"If the property inspectors find that little
or no corrective work is required, you have little
or nothing to negotiate," say Eric Tyson
and Ray Brown in their book, Homebuying for Dummies,
2nd Edition (Hungry Minds, Inc., 2001). "Suppose,
however, that your inspectors discover the $200,000
house you want to buy needs $20,000 of corrective
work for termite and dry-rot damage, foundation
repairs, and a new roof. Big corrective work bills
can be deal killers."
If repairs are needed, there are several ways
to proceed if you still want to buy the house,
the Dummies book advises.
The sellers can leave enough money in escrow
to cover the cost of repairs, with instructions
for the escrow officer to pay the contractors
as the work is completed.
The lender can withhold part of the full loan
amount in a passbook savings account until the
work has been done.
The sellers may give a credit for the work. Lenders
may disapprove of this last alternative because
there aren't assurances that the repairs will
be made.
A home inspection usually costs between $250 and
$400. Hire a qualified inspector. Try to get referrals
from friends or anyone you know who has had a
satisfactory experience with a home inspector.
Also, look for affiliations with organizations
like the American Society of Home Inspectors or
the American Association of Home Inspectors. Both
groups require its members to be certified, meet
professional qualifications, and adhere to specific
business ethics.
Once you make an appointment with a home inspector,
it's important to be there.
Your investment of spending these few hours with
the inspector could prevent headaches and save
time in the future. As the home inspector examines
the various systems and components of your home,
ask him or her to explain what problems may be
encountered down the road, what signs to look
for, and how to prevent them. Try to learn how
things work and how to maintain them. The inspector
may also point out little flaws or oddities that
don't measure up to being mentioned in the report,
but may warrant keeping an eye on.
Says Kuhn of HouseMasters, "A pre-purchase
inspection is your best protection against buying
a home based more on emotions, rather than as
a sound investment."
The Realty Times
Published: November 11, 2003
www.RealtyTimes.com
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