Sometimes Beauty is Only Skin Deep

If you’re in the market to buy a home, it can be hard to resist a place with brand new features: new flooring, new paint, new countertops, new bathroom fixtures, and/or new appliances. While newer can certainly mean better, it’s important to make sure upgrades were done properly and the fresh coat of paint wasn’t added to cover mold, water damage, or other problems.

Before 2007, the housing market was hot—prices were through the roof. Then the market crashed and home values plummeted. Many people faced foreclosure and they stopped maintaining their homes. By the time the housing market picked up again, many homes were in disrepair. This allowed enterprising contractors and do-it-yourselfers to buy fixer-uppers, renovate them, and resell them for a nice profit. This is called a flip, and it is a perfectly legitimate business practice. It only becomes a problem when the contractor or D-I-Yer isn’t ethical, cutting corners to increase profits or not disclosing information to prospective buyers at the time of the sale.

This is why it’s always a good idea to learn about the history of a property. Before closing escrow on a house, do your homework. When were renovations done and by whom? Check to see whether licensed contractors did the work. Confirm that appropriate permits were issued and finalized. What may appear to be a sparkly new bathroom floor could be fungus-damaged wood covered by new tile. Don’t assume that because the house has a new electrical panel that is also has new wiring. Just like you wouldn’t assume new bathroom fixtures meant the whole house was recently retrofitted with new pipes.

If the house is vacant, it’s also a good idea to find out how long it’s been since someone lived there. Even a couple months can cause issues with water, gas and electric. Water heaters leak. Furnaces fail, and air conditioners have issues. If the appliances are brand new, they may work perfectly—or they may not. Because they are untested, there’s no way to know whether they can handle the volume your family requires.

I recommend ordering plenty of inspections before you start planning where to put Great Aunt Mathilda’s piano or your favorite recliner. A home inspection, a pest and fungus inspection and a title report are essential. On the title report, I’d spend the extra money to get a lien-free endorsement from the title company. That means everyone who worked on the house has been paid. Mechanics’ liens are not part of the public record, but can crop up after a sale. Then you’re responsible for taking care of them. I’d also consider hiring a plumber to check the sewer lateral, or obtain a septic inspection if the house has a septic system.

I share this information to make you cautious, not to scare you away. Most of the contractors I know are reputable, hard-working people. In a town as small as Ukiah, it’s hard to be a charlatan and stay in business very long. Those who renovate houses in poor condition can take a house that wouldn’t qualify for conventional loans and make it affordable for a first-time homebuyer with a low down payment. Everyone wins.

If you’re nervous about a newly renovated house, talk to your Realtor. Realtors can suggest which inspections to order and they’re often good at sniffing out subtle cues that may indicate trouble. Realtors see hundreds, sometimes thousands of houses during their careers. They tend to have a sense if something doesn’t feel right.

If you have questions about real estate or property management, please contact me at rselzer@selzerrealty.com or visit www.realtyworldselzer.com. If I use your suggestion in a column, I’ll send you a $5.00 gift card to Schat’s Bakery. If you’d like to read previous articles, visit my blog at www.richardselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 40 years.