Friday, March 5, 2010

Pick a Winner when looking for a House; not a Money Pit! Inspectors see Houses, Buyers see Homes, Sellers see Money!

Looking for a home is more than picking a neighborhood, a school system, a solid town, and proximity to work! Buyers seem to get blinded by these items and neglect to look at the "House" and evaluate it on it's merit, not a sales person's vision of what it can be. Sales people have a habit of looking to the future when reality has short comings, and that is their job. Your job is to evaluate reality, do the math, and keep an eye on the future. So yes pick the right neighborhood and dream what the house can be, but be sure of what it is today, and get a Home Inspection from a professional that is recommended to you. But before you decide to spend money on an Inspection, be sure to watch out for these big items as sort of a filter.

First, narrow it down to three choices if possible. In this market there are many houses to choose from that will be a great home in a lovely neighborhood, in a growing town. That way you can weigh the value each brings and you will have backups in case your first offer is refused. This strategy cuts down on impulsive or emotional decisions and keeps you in control, not the seller. When you only have one final choice then comparisons are difficult and negotiations become leveraged against you. Realtors may not agree with this strategy. If so, ask them why and listen closely to their logic.
Time is not kind to houses, in particular if they are not built well or not maintained consistently. So shop for the newest houses you can afford. They will be up to code and have plenty of life left in them. Older homes, if better built, can also be up to code, and if well maintained, can offer plenty of life in them. The hard part is figuring out their current condition and their useful life. For the same money, do I want a smaller newer home, or an older well maintained home with more space? The difference may be in cash flow for maintenance and repairs on the old versus the newer house price. The devil is in the detail so look closely.

The condition of the roof, siding, windows, foundation , heating/cooling systems , septic systems, etc, are all big ticket items that if used up or fully depreciated can be quite expensive to replace. Homes that are over the 20 year mark may have issues with some or all of these, so look closely for leaks, stains on the ceilings, i.e., roof leaks.
Look at the siding to see if it's tight to the weather, no cracks, splits, curls, or obvious rot. Look at the windows to see if they are old single pane, loose, broken, or the drapes move with the wind. Window systems do not last forever and newer ones will pay for themselves in 2 to 3 years depending on the cost of your heat and insulation.

Is the foundation concrete or something less strong? Is it solid with no cracks, holes, bellies, or damage? Foundations hold up the house, so this area is important to be solid and preferably dry. Is the basement dry, no stains, no obvious rust or rot?


Heating systems last an average of 25 years, but gather lots of rust and corrosion along the way. The best indication of its condition is if it's running and the heat is up in all the rooms that are heated. Has it been maintained with service tags attached showing the dates? When was it installed? How much fuel was used last winter? New 98% efficient systems can pay for themselves in 3 to 5 years in the money they save.

Systems are a huge item that can cost a lot of money to replace. Is there a Title V inspection report in hand by the seller? Has the home been occupied consistently before the inspection? Has the system been pumped out every 2-3 years or when was the last time? Most importantly is there a food grinder/disposal in the kitchen sink? This has a huge impact on the life of a system if it was not engineered for the additional load, etc. Most towns do not allow them, yet somehow they are left off Title V evaluations on occasion with lots of excuses. A new septic system can cost as much as new windows on the whole house. If you see huge puddles in the lawn and it smells, it could be a septic problem.

You don't have to inspect every little item, that's for an inspector to do. But if these big items are addressed or filtered out, then you may have a winner to have inspected by a professional. Keep in mind that Time and Money can fix almost anything! So first step is to identify the issues, price the repairs, then do the math on your offer. Keep in mind that assessed values, listing prices, appraisals rarely reflect the items above, but rather reflect a house in good condition. A house with all of these issues can still be a find, if the asking price reflects the repairs that need to be done. That's the math work that needs to be done.

A professional Home Inspector will evaluate all the systems in a house and give you their current condition with comments on their useful life where applicable. The goal of an inspector is for you to have no big surprises when you move in, provided everything was accessible and visible. So when checking out who to use for inspections, be sure they cover everything. There are no quick, cheap inspections unless you skip things. A professional inspection on an 1800 sq ft house is a good 2.5 hours more or less. Depending on age and condition it may take longer so set your expectations.

Picking a winner in the house race is not easy; it requires hard work, time, and the right experience! There is a right one for everyone who is willing to invest the time!