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1 How old is the house?
More than anything else, the age of the house will tell you what to expect. The rule is pretty predictable: the older the house, the more likely it will need major repairs and renos. But don't assume that all newer homes are problem-free. When a house (or a renovation) gets to be twenty or thirty years old, lots of things start breaking down. But some new homes are not so much built as slammed together, and can hide all kinds of problems just waiting to appear.
2 How long has the vendor owned the house?
This is a really important question. Very brief ownership (anything less than a year), and you might be looking at a "flip." That's when someone buys a house, fixes it up, and then resells, looking for a quick profit. There are good and bad flips, but far too often a flip is the worst kind of "lipstick and mascara" job, where they've made a lot of cosmetic changes and overlooked (or covered up) the mechanical and structural issues.
3 What's the sales and renovation history of this house?
Your agent will be able to produce for you a list of recent sales activity on the house you're looking at. You'll want this for a couple of reasons: For one thing, it will tell you if the house has been bought and sold a lot. Lots of sales activity might be a sign of big problems with the house -- as each new buyer discovers he's been taken for a ride, he decides to get off that merry-go-round by selling the house and all its headaches to someone else. On the more positive side, a list of recent sales can help you determine if the asking price is fair. You'll be able to see how much the previous owner paid for the house and when, and your agent can find out (from the vendor's agent) what changes or improvements have been made since that time. Fair market value is not simple arithmetic, though: it also takes into account the natural rise in land and housing prices, especially in hot real estate markets.
From The Holmes Inspection: Everything You Need to Know Before You Buy or Sell Your Home. Published by HarperCollins Publishers Ltd. copyright © 2008 by Mike Holmes. All rights reserved. Reprinted by permission of HarperCollins Publishers Ltd.
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8 Comments
#5 isn't true. Any house used as a grow op has to be disclosed on the listing. That being said it's your agent job to double check. If you find out after you bought the house that it was used as a grow op you could sue the Realtors and file a complaint with RECO (Real Estate Council of Ontario), and you'd win.
Exactly! And your realtor representing you as a Buyer would request and SPIS (Seller Property Information Statement) from the listing agent. This is a multi page form with information about the home including how long they have lived there, improvements done, moisture problems, and if it was a grow operation. Keep in mind that it is not a warranty, and information statement. Current court judgements involving SPIS's were consistantly looking for honesty from the Seller. A Sellers lawyer would advise not to fill one out, while a Buyer legal advise would be to insist on one. Honestly, I like to be able to provide it, so I ask my Sellers to fill one out to the best of their ability. Karyn Graham, Realtor Chase Realty Inc. Ancaster, Ont
Exactly! And your realtor representing you as a Buyer would request and SPIS (Seller Property Information Statement) from the listing agent. This is a multi page form with information about the home including how long they have lived there, improvements done, moisture problems, and if it was a grow operation. Keep in mind that it is not a warranty, and information statement. Current court judgements involving SPIS's were consistantly looking for honesty from the Seller. A Sellers lawyer would advise not to fill one out, while a Buyer legal advise would be to insist on one. Honestly, I like to be able to provide it, so I ask my Sellers to fill one out to the best of their ability. Karyn Graham, Realtor Chase Realty Inc. Ancaster, Ont
Okay, what if I didn't have an SPIS? We moved into a home a month ago. We found that the seller had hidden water damage and mould problems. Our proof that they covered it up was that they had three kick plates where the mould problem was, the top one fine the other two water damaged and mouldy. They also painted water damaged ceiling tiles below. We have take photos all the way through the fix up process. We've purchased a new dishwasher as the one that was here had a small hole in the back where the water was dripping from. Hopefully we'll be able to put the cabinet back in without dimolishing the entire kitchen. Is it just a case of buyer beware and we're out of luck or can we sue these people for hiding the problem. If we can sue is it just to cover the cost of work and materials and or replacement of dishwasher. Brenda Shedden Pefferlaw Ontario
I'm an agent here in Surrey BC Canada where we have an abundance of grow-ops. The same disclosure requirement applies here that you must must disclose if the home has been used for illegal activity. However that is in a perfect world. I have seen many, many homes that were obvious to me they had been a grow show but the owner checked the "NO" box on the questionaire. These are criminals doing criminal activity, of course they won't disclose if they can get away with it. I've found the only homes with disclosures are the ones where the activity was caught by the police. Otherwise they don't disclose for obvious reasons- the house would be worth a lot less and hard to sell and the proceeds of crime department would be out to get them. Do your due diligence- our city has a record of grow op addresses-talk to city hall, the police department and the neighbours. If the basement has just been remodelled in the house you are buying yet the rest of the home is original be very cautious... Most grow ops have new flooring (usually laminate) and paint yet they don't put back nice light fixtures. Often it's just a ceramic bulb holder. Look for tape residue-usually the red tape- on the forced air heat vents in the basement ceiling-they tape them off to keep out the heat. And the biggest sign are holes in the ceiling that have been filled and painted. This is where they hung the halide lights and there will be a pattern- probably spaced every 2 feet or so. Look for the holes to flash in certain light- turn on more lights or turn off some and keep looking.
Brenda, you may be victim of "caveat emptor." If you used a reputable Realtor, the offer should have included a home inspection. No one should ever buy a home, new or older, without a home inspection. If you bought an MLS listing, it should have included an SPIS, but some do not practice this, although they should. Before you bought the home, you should have viewed it twice...once with new, emotional eyes, and the second time with logical, investment eyes. Your first time, in you're looking to see where you furniture fits, and if it's a home you'd like to own. The second viewing is when you go back and look for those little things...kickplates, in your case...before you decide you invest your money. Was a home inspection ever mentioned? Was there an SPIS on the property when it was listed that you didn't know about? Can you prove the sellers were malicious in hiding this, and an you prove the Realtors knew about it, if they did? I don't know what will come out of it, but you could try contacting the Brokerage that sold you the property and speaking with the Broker. You could also try contacting the Listing Brokerage and doing the same. They may or may not try to compensate you in some way. If no one was aware, and no one asked the right questions, and no SPIS was filled out and signed, then you may be on your own here. TeamAlex@royallepage.ca
Brenda, you may be victim of "caveat emptor." If you used a reputable Realtor, the offer should have included a home inspection. No one should ever buy a home, new or older, without a home inspection. If you bought an MLS listing, it should have included an SPIS, but some do not practice this, although they should. Before you bought the home, you should have viewed it twice...once with new, emotional eyes, and the second time with logical, investment eyes. Your first time, in you're looking to see where you furniture fits, and if it's a home you'd like to own. The second viewing is when you go back and look for those little things...kickplates, in your case...before you decide you invest your money. Was a home inspection ever mentioned? Was there an SPIS on the property when it was listed that you didn't know about? Can you prove the sellers were malicious in hiding this, and an you prove the Realtors knew about it, if they did? I don't know what will come out of it, but you could try contacting the Brokerage that sold you the property and speaking with the Broker. You could also try contacting the Listing Brokerage and doing the same. They may or may not try to compensate you in some way. If no one was aware, and no one asked the right questions, and no SPIS was filled out and signed, then you may be on your own here. TeamAlex@royallepage.ca
It has been said that with interest rates so low it is a good time to buy a house. I disagree with this argument. If interest rates are high or normal then when it comes time to re-mortgage you can possibly look forward to lower monthly payments. With interest rates at historical lows you most definitely will be paying higher monthly payments when your mortgage term is up. This will also have a dampening effect on house prices which will mean it will take more income to qualify for a mortgage when rates rise. Your house value could go down or be stagnant.