As you prepare to give the GREEN LIGHT to the right property for you, what RED FLAGS should you look for? Most things that are wrong with a property can be fixed by spending some or a lot of money. Not everything can be fixed, though, and you want to go into your home purchase with eyes open. Be sure that you are equipped to deal with anything your chosen house might have in store.
Some “red flags” are things that you can’t change about a house and which will make it more difficult to sell when YOU go to sell; identifying these tells us that if you buy that particular home, you must get a *really* good deal in order to make up for the loss in resale value on the other end.
Most “red flags” I am going to point out to you as we are looking at property. Here are some of the things we look at carefully:
- Sold “AS IS” with no disclosure. It’s fine if a seller wants to sell “as is”. What that means is that they don’t want to do any repairs. But if a seller has lived in the home, I want a disclosure. Even if they “don’t know” the answers to all the disclosure questions, that in itself is good information. A caveat here is if the home is an estate sale or foreclosure and the seller has never lived in or owned the home. In that instance, I do want them to disclose anything that they do know, but there is a reason why they might not know anything about the home. Sometimes getting a disclosure is as easy as explaining to the seller’s agent that selling a home “as is” is NOT the same as selling a home with “no disclosure”.
- The lot slopes steeply towards the house. If the front or back yard slopes steeply toward the house, that can signal water problems in the basement or crawlspace. Proper drainage and regrading can help ameliorate the hydrostatic pressure of ground water pushing against the house, but this type of work is usually quite costly. What you look for here is that if there IS a slope, there is a flat area between the bottom of the slope and the house and that the water drains around the side of the house and not into the basement or crawlspace. We also want a grade of not more than about twenty percent and that the water flow is not directed to the house, but around it.
- Check crime maps. Now, personally I wouldn’t say that high crime in a given area should make it a “no go” because there’s crime everywhere. A police officer explained to me once that the criminals seek out the most expensive parts of town – why wouldn’t they? And so even a safe looking area might have lots of crime, and you want to know about it. Is it a sudden rash of crime or a continual problem? If there is crime in a given area, you should be looking for a much better deal than you would elsewhere and, of course, you will want a good alarm system. There are lots of places online to check for crime and for criminals – there are sites that track all sorts of crime, and sites that map the sex offender registry. Look at them both before you make a decision.
- Building materials that have been the subject of class action lawsuits:
- POLYBUTYLENE PIPES: Poly is a form of plastic resin used in plumbing supply pipes extensively during 1975-1995. An estimated one in five homes built during that time will have poly pipes. Your inspector can typically tell you if the home has poly pipes – the supply pipe is usually grey, and if it is the main line coming into the house, blue. What’s the problem? Over time polybutylene pipes deteriorate from the inside, and eventually cracks form. When you have poly pipes, you never know when they might start to leak, so it’s better to replace them pre-emptively.
- SYNTHETIC STUCCO: Also known as EIFS (exterior insulating and finishing system), EIFS was introduced to the United States in 1969. At first, it was primarily used in commercial buildings until the 1980s, when it was introduced in the residential market. It has superior insulating properties, but that is also the problem – the properties of the product that are designed to keep water from getting into the building envelope make it difficult for that water to get out once it does get in. With commercial uses, the building envelope is steel or concrete. The problem in the residential market is plywood framing, which is a problem when moisture intrudes, and improper installation.
- L.P. SIDING: This siding was used extensively in the 1980s. Louisiana Pacific introduced this composite siding in 1985 and it was very popular until problems starting cropping up in the early 1990s. Louisiana Pacific siding is little more than excess lumber which is ground up, mixed with glue, and run through a press; this a perfect environment for fungal growth. The problematic fungus was also part of the package, as it was already present in the wood when it was ground up. Louisiana Pacific received most of the notoriety for this, but several other companies also made a similar product with similar problems.
- ASBESTOS: Asbestos is an excellent fire retardant and insulator and so was used extensively in buildings in 1940 through 1970. It was then discovered that prolonged exposure can lead to lung cancer when the asbestos is disturbed. Asbestos can be found in many forms – floor tiles, fiber cement siding, linoleum, roof shingles, and HVAC duct insulation. Generally speaking, the key is to not disturb the asbestos. The key to deciding whether it’s a red flag for your purpose is discovering where and how much of it is in the home.
- FLOOD PLAIN. Always ask if the home is in a FLOOD PLAIN. If you see a home that you just cannot believe is in your price range, chances are it’s in the flood plain. There are differing levels of severity; for instance, the 100 year flood plain means that every 100 years, on average, the home will flood. A 500 year flood plain, then, is less severe since the average is every 500 years. But keep in mind that in 2009 Atlanta had a 500 year flood and it could happen again in our lifetimes. In fact, FEMA (the Federal Emergency Management Agency) redrew and expanded the flood plain maps after the 2009 floods.
The key to identifying red flags and deciding if they make a given property a NO GO for you is expert advice. Have a knowledgeable Realtor on your side and always, always, get a thorough home inspection by a certified and experienced home inspector. Attend your inspection and ask lots of questions. Know that properly addressed and accounted for, a red flag property could end up being a great deal for you. What is a red flag to one buyer can be a great opportunity for someone ready willing and able to deal with the problem.
Mary Anne Walser is a licensed attorney and full-time REALTOR, serving buyers and sellers in all areas of Metro Atlanta. Her knowledge of residential real estate and her legal expertise allow her to offer great value to her clients. Mary Anne serves on the Committee that drafts and reviews the contracts utilized by all REALTORS in the State of Georgia. In addition, she is a member of the Atlanta Board of Realtors, the Georgia Association of Realtors, the State Bar of Georgia and the Georgia Association of Women Lawyers. Contact Mary Anne at 404-277-3527, or via email: email@example.com.