Do you really want to win a war this way?

“Real Estate bidding wars are back in parts of D.C. area”

That was the headline in last week’s Real Estate section of the Washington Post. To a Home Inspector, that is a very scary prospect: people engaged in bidding wars are often sorely tempted to waive the home inspection clause. This doesn’t just mean less work for Home Inspectors; it also means buyers are setting themselves up for the possibility of major expenses due to hidden defects in the home.

To protect yourself during the homebuying process, remember the “Five W’s” – Who, What, When, Where and Why.

Who is selling the house?

Many of the houses that are being bid on are bank-owned, which usually means it is in foreclosure. Such houses often have significant issues, often due to lack of maintenance. If owners couldn’t pay the mortgage, they probably could not afford regular service on the major systems of the house either.

What is the condition of the house?

Is the house vacant? If so, was it “winterized”? Winterizing is the worst thing you can do to a house. Modern houses are not meant to stray much outside the 55-85°F range. When a house is winterized and left to the elements you will get both cosmetic and system damage; it is just a matter of how bad it is.

The worst issues come when power is cut off, including power to the sump pump. In one winterized house I inspected, the basement flooded, and stayed flooded for a long time because the sump pump had no power.  Everything in the basement was ruined: the walls, carpet, appliances (Furnace, Water Heater, etc.) and the spores from what grew in the basement slowly spread throughout the house via the ductwork. Every surface in the basement was “fuzzy” and the rest of the house was badly contaminated.

In houses with ducted heating and cooling systems, assume that mold issues in the basement have been spread by the ductwork to the rest of the house and are just waiting for the right conditions to grow. Older homes with radiators and only window AC units are much better at containing such problems to the basement.

Broken pipes are also common in winterized houses, especially small breaks that are in walls that take 4-5 hours to show up. If water service is restored just before the inspection, and the inspection only takes 3 hours, the leak doesn’t show up until two hours after we leave – or it might not show up at all if the water is turned off immediately after the inspection. But when the water is restored for you to move in, you are in for a rude surprise, and a hefty repair bill. This is why ALL utilities need to be restored 24-48 hours prior to an inspection.

When was the house built?

At 5 years old, many systems may still be under warranty. Did the owners do the recommended annual maintenance? Are any of the systems subject to a manufacturer’s recall?

At 10 years old, most warranties (appliance, structural, builder, etc.) have expired.

At 17 years old, many appliances, furnaces, water heaters and roofs have reached the end of their useful life.

At 25 years old, many appliances, and systems should have been replaced. Renovations may have been made; were the proper permits obtained?

At 35 years old, most houses have seen at least one renovation. The second roof is nearing the end of its useful life.  Lead Paint could still be present.

At 50 years old, almost all appliances, systems and even the electrical panel have surpassed their useful life.  Insulation is usually minimal, unless renovations have been made. Lead paint is a common finding.

Where were changes made?

The most common places for renovations are kitchens, bathrooms and basements. I often see extensive and costly renovations done in kitchens, but have to report that they failed to put in a $20 Ground Fault Circuit Interruptor (GFCI) outlet. GFCI’s were required in bathrooms since 1975 and in kitchens since 1987, so if the kitchen renovation was done after 1987 there is no excuse for not having these life-saving outlets.

If they moved plumbing, added electrical circuits, or moved a wall they need to have pulled permits. Bathroom renovations are often done without permits because they are only doing cosmetic changes, and not structural, plumbing or electrical. But why spend $10,000 on a bathroom and not put in a $20 GFCI to save your life?

Most basement renovations include adding a few new circuits and probably a bathroom. Were the proper permits and inspections obtained? Basement bedrooms are a particularly sore point: they require emergency egress, either a properly sized window or a door, and a smoke alarm.

Why is the house being sold?

The reason for the sale may be an indicator of what might be lurking unseen. Is it an elderly couple moving to a retirement community? The house is likely older, with minimal updates; clean, but with older, outdated systems nearing or past the end of their useful lives. Is it a short sale? These houses tend to be newer, but with deferred maintenance and possibly vandalism as well. What would have been a minor repair several years ago (a leaking fixture for example) now becomes a major restoration job (replacing rotted flooring).

If you are involved in a bidding war

Ask for an informational-only inspection. This is basically a go/no-go inspection. I do the same inspection as I always do, but you make only a go/no-go decision rather than asking for particular things to be fixed/replaced/addressed.

Some things to think about

• The life of almost all home “systems” is approaching an average of 17-20 years. This includes roofs, furnaces, AC units, Water heaters, dishwashers and washing machines. Some may last much longer (AC units, refrigerators) but will use much more energy than newer units. Buying a 15-17 year old house with original appliances puts you in the danger zone in about 2 years.
• A 15-year-old roof may not be leaking today, but may need replacing in the next 3-5 years. Replacement costs tend to start in the $7,000-$15,000 range for a townhouse or small single-family home. Failure to replace a roof can lead to major structural damage in the framing members, drastically increasing the replacement costs.
• A furnace/AC system may be ‘working’ today, but costing you DOUBLE what a newer furnace might in fuel.  Gas and Oil furnaces could be spewing unseen toxins into the house.
• Appliances that are “only a few years old” can cost more to repair, and re-repair, than a new appliance.
• The toilet that seems just a bit loose may have a rotten floor underneath it that will require MUCH more than just tightening or a new Wax ring.

Still not convinced?

Skipping a Home Inspection is penny wise and pound foolish. Many of our clients have saved thousands of dollars in repairs by having us uncover defects in the houses they were considering. Buying a home is an enormous investment, and a Home Inspection will help make sure you have all the necessary information before you finalize the deal.