Tips to avoid buying a problem house

Have you ever bought a bad “lemon car”? I have.Several, in fact. Fortunately, I was able to either get my money refunded or tradefor a better car.

But getting out of the purchase of a “bad house”isn’t so easy. In fact, it might be impossible. That’s why home buyers need toknow how to avoid purchasing a bad house.

Purchase Bob Bruss reports online.

NO HOUSE IS PERFECT. As even home builders willadmit, no house is perfect. Hopefully, the imperfections are minimal. What oneperson considers a defect is often not important to another person.

For example, I own a second-home residence about ahalf-block from a spur railroad track, which is used two times each weekdaywith a slow freight train in each direction. The first train of the day comesthrough about 8:15 a.m. Its mellow whistle is a nice wake-up call, which Idon’t mind. The return train comes by about 5 p.m.

While not a home defect, that quiet railroad track would beconsidered a serious detriment affecting nearby residence market values if manynoisy high-speed trains came through every day.

However, most house defects or problems are not so obvious.

WHAT IS A “BAD HOUSE”? There isno legal definition of a bad house. But most states now have laws requiringhouse and condo sellers to disclose in writing all known defects that have amaterial effect on the home’s market value.

The majority of these printed disclosure forms require theseller to disclose defects “to the best of your knowledge.”

Smart home sellers, and their real estate agents, areusually quite honest about revealing obvious known defects. The reason is theydon’t want to get involved in a lawsuit with the buyer after the sale closes.Full disclosure prevents such lawsuits.

The best realty agents now suggest their home sellers obtaina “pre-sale professional home inspection.” Then the seller will knowwhat defects the buyer’s inspector is likely to discover.

As a home seller, I’ve found a pre-sale inspection gives methe opportunity to repair any problems or at least fully disclose them to thebuyer. Another advantage is home buyers will often accept the seller’sprofessional inspection report (but as I buyer, I always insist on hiring my ownprofessional home inspector).

MANY HOME SELLERS DON’T KNOW ABOUT THEIR HOME’S DEFECTS. If thehome seller has not lived in the house recently, he or she might not know aboutits defects. For this reason, most states exempt probate and foreclosure salesfrom the disclosure rules. Or the seller might honestly not know about thehome’s problems.

To illustrate, in the 28 years I’ve owned my current home, Ihave never visited its “crawlspace” beneath the house. And I have noplans to inspect that cold, dark area where, when I bought the house, thetermite inspector reported there are the bones of several dead animals downthere. Also, I haven’t visited my attic since the new “lifetime” roofwas installed about 15 years ago. The roofer didn’t say if it was his or mylifetime.

WHY HOME BUYERS SHOULD INSIST ON A PROFESSIONAL INSPECTIONCONTINGENCY CLAUSE. Just in case you decide to buy a house where theseller has not had a pre-sale professional inspection, and/or the seller isdishonest and “forgot” to disclose a serious home defect, all homebuyers should insist on a contingency clause in their purchase offer for aprofessional home inspection.

Depending on the size of the house, such inspections costaround $350, sometimes more. After the seller accepts the buyer’s purchaseoffer, buyers and their realty agents should accompany their inspectors on thetwo- to three-hour inspection to discuss any unexpected problems discovered. Myexperience has been professional inspectors are very talkative and will revealif a problem is serious or superficial.

If the professional inspection reveals a previouslyundisclosed serious problem, the buyer can then either a) cancel the purchaseand obtain refund of the good faith deposit, or b) reopen negotiations with theseller for a repair credit.

Whether I am a home buyer or seller, I prefer to hire aprofessional inspector who belongs to the American Society of Home Inspectors(ASHI). Their membership and experience requirements are the toughest of thehome inspection groups. To find a local ASHI inspector, go to or call 1-800-743-ASHI.

WHAT IS AN “AS IS” HOME SALE? Manysellers of older homes decide to sell “as is.” That means the sellermust disclose known defects in the property but will not pay for any repairs.

For example, if a house’s roof is 20 years old but isn’tleaking, it is nearing the end of its useful life. An “as is” homeseller can refuse to contribute to the cost of a new roof and leave it up tothe buyer to decide to purchase or not.

Another reason for selling a home “as is” occurswhen the residence obviously needs renovation but the seller either doesn’thave the funds or doesn’t want the inconvenience. Also, it is often better tolet the buyer remodel to the buyer’s standards rather than the seller wastingmoney on upgrades, which might not add to the home’s market value.

SUMMARY: The best way to avoid buying a “badhouse” is to insist the seller provide a full written disclosure of knowndefects in the property. In addition, the buyer should insist the purchaseoffer contain a contingency clause making the purchase contingent on thebuyer’s approval of a professional inspection report. More details are in myspecial report, “How to Avoid Buying a Bad House,” available for $5from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at

(For more information on Bob Bruss publications, visit his
Real Estate Center

Copyright 2006 Inman News

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