CAVEAT EMPTOR- BUYER BEWARE!
You’ve likely heard that term before. When considering a purchase as large as a house, it can be unsettling to think that the onus is on you, the buyer, to know all the right things to look for and questions to ask. Add the craziness of a super heated market and lack of opportunity to include “normal,” protective conditions in your offer, and the stress mounts rapidly!
We’ve seen thousands of homes over the years and have helped hundreds of clients protect themselves from buying a money pit.
During your search for a home, here are 11 questions you should ask (preferably in writing) to ensure that you have all the information you need to make a good decision.
1. Are there any latent problems with the home?
A “latent” defect is “a fault in the property that could not have been discovered by a reasonably thorough inspection before the sale.”
It’s important to ask this question because even if you have the opportunity to include a home inspection, inspectors cannot tear walls apart to see problems. Inspections are “visual inspections only” and will not likely turn up a problem only the seller knows about. If the seller agrees (in writing) that there are no latent defects to their knowledge, this adds protection if you discover an issue down the road. If you include this in your offer and the seller refuses to sign it, the red flag they raise might save you from buying a problem.
2. What improvements have the owners completed? Was a permit necessary? Was one obtained?
Once you own a property, you own all the problems with it. Hence the importance of knowing some history about any improvements that have been done. A seller who has done extensive renovations without permits may have inadvertently damaged the structure in ways that will be very expensive to fix.
As a buyer, don’t be afraid to ask who did the work. Was it DIY on Saturday afternoons, or were projects completed by professionals? If the seller removed walls and didn’t get a permit, you cannot be sure it was done correctly.
3. Have there been any leaks? Basement? Roof? Plumbing?
This falls under the “latent defect” question above, but it often helps to ask a more specific question to get the owners thinking. Water leaks are among the most dreaded issues because they are expensive and intrusive to remedy. Few things are more demoralizing than discovering a water leak in the basement that ruins the finishes. The even bigger question might be whether mould remediation is necessary.
4. Why are the sellers moving?
This question is more than just being a busybody into their personal lives, and there is no guarantee that they will tell you the whole reason, since many people do have multiple personal motivations.
The sellers may, however, give you some insight into issues that are important to you: Perhaps there are no children in the neighbourhood for their kids to play with. Maybe there is new construction coming that they don’t want to live through. Or maybe they don’t get along with the neighbours.
We actually had one experience not too long ago when we asked this question. The seller replied that she was raising two young sons who were approaching their teens. She decided to move because “the hookers hang out at the end of our street every night,” and she didn’t really want her sons to grow up in that environment.
Though maybe not the most consequential question, you could get information that helps you to decide whether this location is right for you.
5. How is the neighbourhood?
If you get little from asking them why they’re moving, this question may feel less intrusive, and get you more of the kind of information you’re looking for.
Your agent will likely have their own insights, but the seller will have inside knowledge of individuals who will become your close neighbours. Sometimes you find out wonderful things about people who will become close friends in the years to come!
6. Is there a pre-inspection report available?
Occasionally, listing agents and their clients hire a home inspector before listing the property for sale. This is a very desirable level of transparency – and a good sign that they want to be honest with buyers.
Still, if this inspection is available for you to look at, you should absolutely go through it and see if there are any issues that make you uncomfortable. Especially in this time of firm offers, a home inspection can provide information that you might otherwise only find out after you take possession, when it’s too late to walk away.
7. Are there any rentals other than the water heater?
Water heater rentals are kind of common. They are easy to take over, and they typically cost about $20-30 a month. If you decide to get rid of these in favour of buying one that you own outright, it’s pretty straightforward.
Other types of rentals can be problematic when selling a house. For example, we often see furnace and air conditioners on rent-to-own programs. The contract may or may not include the water heater. Water softeners, filtration systems, or other items may also be on payment plans.
This matters because there is most likely a lien on the house in the amount of the outstanding balance to be paid. This has to be paid out or assumed by the buyer on closing. To fully understand your costs, be sure to ask about these things. There are ways to structure your offer to ensure that there are no surprises.
We sold one house years ago that had a $1500 lien on the house for just the rent-to-own water heater and $8000 for the furnace! Don’t hesitate to ask questions!
8. Have there been any natural deaths, suicides or murders in the home?
These matters are important to some buyers and not others. We hear about different levels of discomfort from buyers with natural deaths, especially if the house is very old and the death happened a long time ago.
Criminal activity or suicide usually evokes a different reaction. Some buyers consider it a stigma that is too powerful to overcome. Still, the law in Ontario at the moment does not compel sellers to volunteer this information unless you ask.
Before making an offer, get as much information as you can.
9. Has the home ever been used for the growth or manufacturing of drugs?
Similar to the question above, the stigma might be too much for you as a buyer. Beyond the psychological effects of living in a house that was once used as an illegal grow-op, though, there are material considerations.
This type of history should make you pay special attention to the possibility of damage to the wiring, structural damage, or mould.
10. Are there any easements or restrictive covenants that limit what you can do on the property?
Easements for utilities are everywhere – we depend on them. There are pipes and wires underground so that we can have cable service, water, and sewer service. Utility companies need to have access to their equipment, even when it is on private property. This may affect you if you want to change the property – for example, by putting in a swimming pool or a large deck. Knowing which part of the property is affected by easements will help you to measure for your planned changes.
One of the more unusual stories we heard was about a property near the Hamilton Airport. When researching restrictive covenants, they discovered that there was a height restriction placed on a cluster of houses because of air traffic. Any buyer planning to add a storey to the house would have had a real problem on their hands!
11. Are there any building projects planned for the neighbourhood?
Sellers often know about proposed future projects. They may receive communications from developers or municipal departments.
If there are changes coming to the neighbourhood, it may change the way you feel about it. Maybe you love the “open space” near your property. How will you feel if that space becomes an apartment building or a row of townhomes?
When working with your agent to find a home that is right for you, take the time to let them know what’s important to you. Let them be your guide to finding out what you don’t know. Describe your future plans for the house and the things you’d like in a neighbourhood. They can help you know what questions to ask to get as much information as you need.