Key Buyer Protections You May Need for Your Home Purchase

How Can You Protect Yourself When You Buy?

 

When purchasing a home, there are a number of protections—called contingency clauses—that you can write into your contract to allow you to back out of the sale for specific reasons.  For instance, if your inspection reveals major problems with the home that the seller can’t or won’t fix, your loan financing falls through, you find out the HOA rules or neighborhood weren’t what you were expecting, etc. The sheer quantity of available contingencies is dizzying. Our list includes 26 provisions alone on preprinted forms, not including any specific requests your broker might negotiate in.

Clearly, not all contingencies are used in a typical transaction and many make your offer less competitive. Still, we think it’s critical for you to understand the legal implications and trade-offs of each contingency so you can make the smartest decisions possible.

Financial

We’ll start with contingencies that relate to financing. Except in extremely competitive situations or non-financeable home sales (think dilapidated homes, major structural issues, or land-value sales), a financing contingency is relatively commonplace. It generally protects you in the event you can’t secure a loan (provided you follow the agreed upon protocol). It includes an appraisal contingency to protect you in the event the lender feels the homes is worth less than you agreed to pay for it.

If you have an existing home that needs to close before you can complete your home purchase, there are two standard contingencies available to you. The first, Buyer’s Sale of Property Contingency, is used when you have not yet secured a buyer for your current home. It sets time periods to both actively list your home for sale and to secure a buyer contract. It ties the closing of your new home to the closing of your current one, and because of this, sets very specific protocols for accepting an offer. It has a bump provision that allows the seller to accept a non-contingent offer if you don’t remove your contingency within a predetermined time frame.

The second contingency, Buyer Pending Sale of Property Contingency, is used when you have already secured a buyer for your home and are awaiting its closing. Because your home is already under contract it is far less controlling than the Sale of Property Contingency, but it protects you if your first sale falls through.

Less common financial contingencies include a standalone appraisal contingency available for cash transactions, a seller-financing attorney review, and a contingency related to homeowner’s insurance availability.

Home and Property Condition

In highly competitive situations a buyer may need to conduct their due diligence before making an offer. In most other scenarios, though, the buyer has countless opportunities to investigate a potential property and walk away or renegotiate if it doesn’t measure up to expectations.

The inspection contingency includes the ability to evaluate the structural, mechanical, and general condition of the structure(s), compliance with building and zoning codes, an environmental or hazardous materials inspection, a pest inspection, and a Geotech or soils and stability inspection. In addition, it includes the option to allow a sewer system inspection or a neighborhood review and permits an inspection to determine the presence or non-presence of oil storage tanks on the property.

Specific separate contingencies allow for evaluation and review of documentation related to wells and septic systems, assessment the presence of lead-based paint, or review of lease agreements for components like propane tanks, security systems, and satellite dishes, etc.

There is an option to make the sale contingent upon seller providing a home warranty or require cleaning and personal property removal prior to buyer taking possession.

Buyers wanting to determine if a home or property is suitable for their intended use (think building, remodeling, platting or development) would incorporate a feasibility contingency into their offer. Buyers of vacant land might include the Land and Acreage Development and Use addendum that incorporates both disclosures and contingencies.

Built into the standard local purchase and sale agreement is an Information Verification Period that gives the buyer 10 days (unless modified) to verify statements made by the seller of listing firm related to the property.

Title

In Washington State, the buyer most commonly receives a deed at the time they purchase a property. That deed is subject to financial liens and encumbrances, restrictions, and physical encroachments. A standard title review contingency allows the buyer the opportunity to review these items and object to any they cannot live with. A buyer has the option to complete a survey of the property boundaries and purchase extended title insurance if desired. Surveys are exceedingly expensive and most typically completed on valuable parcels of land such as waterfront and commercial property.

Community and Homeowners Association

Many communities have homeowner’s associations that govern rights and responsibilities within a community. A homeowners’ association review contingency requires the seller to deliver documents and meeting minutes to buyer that are then subject to buyer’s approval.

Condominiums and Common Interest Communities are also regulated by statute and have specific requirements for review and approval of budgets, documents and meeting minutes like traditional contingencies. Although governed by statute, it’s important for buyers to ensure they receive and review the resale certificate or public offering statement within the allotted time frame to avoid an automatic waiver.

Perhaps you are making an offer in a community or neighborhood you know nothing about and don’t have enough time to check it out. A neighborhood review contingency allows you to do things like research crime statistics, talk with neighbors, explore traffic patterns, and check the noise level (nothing like finding out about that incessantly barking dog after closing). This is something that ideally you do before writing your offer to make it as strong as possible, but it’s nice to know its available in a pinch.

Leases

When buying a property subject to an existing lease that will continue after closing, a lease review contingency will require the seller to deliver a copy of the lease along with books, records and other agreements and provide for your review and approval within a specified time frame.

Attorney Review

Finally, an attorney review contingency will allow you a defined time period with which to have your attorney review and approve specific provisions or the entire purchase contract.

 

No two homes, buyers, or sellers are the same. Every offer you write should be tailored to the specific situation. Nothing tops having an experienced broker to guide you through the process. This is what we do every day. Together, we’ll create the best strategy for you.

Choosing the right broker can save you thousands on your home purchase. Whether through local market knowledge and pricing analysis allowing you to make a smarter offer, recommendations and resources to thoroughly conduct your due diligence and avoid costly mistakes, or savvy contract negotiation to help you get the terms you need, having a Windermere broker on your side is one advantage you can’t afford to sacrifice.

 


ABOUT WINDERMERE MERCER ISLAND

We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.

 

 

© Copyright 2019, Windermere Real Estate/Mercer Island.

Posted on September 20, 2019 at 4:11 pm
Jennifer Craven | Category: Buyer Tips | Tagged , , , , , , , , , , , , , , ,

What’s YOUR Golden Age for NW Homes?

The Eras of NW Home Building: Get the Scoop Before You Buy

 

The Northwest has experienced many changes in residential construction though the eras of home building. While not universal, here are a few typical housing rules of thumb we have seen in the Seattle region…

 

Styles, floor plans and typical home attributes:

1900-1920’s

Craftsman, Arts & Crafts, and Tudor homes dominated this era. They often featured more built-in cabinets and custom woodwork. Most were two stories (with or without a basement), and had smaller, functional rooms with an overall feel of quality and charm. Smaller, detached, alley-accessed garages were common.

1930-1940’s

Seattle Box Houses were typical of this depression and wartime era. Often very small and economically constructed, they had fewer windows, were most likely one-level homes or basement ramblers with only one bathroom, and rarely had a garage.

1950-1960’s

Mid-Century Modern homes inspired by post-war exuberance brought us the solidly built homes of this era, which remain extremely popular today for their design, floor-plan flow, and significant use of windows that invite in the natural light. Modern lines, larger and flowing rooms, flatter rooflines, and smaller kitchens were typical of his era. Larger lots were the norm and carports were more typical than garages.

1970-1980’s

Mid-Entry or Split-Level and NW Contemporary homes brought an entirely different vibe altogether. Affordable building was the buzzword as interest rates hovered at their highest levels in trackable history. Often square footage was split at the entrance by an upper and lower stairwell. Eclectic designs were simple and functional with very separated floor plans and spaces, smaller kitchens, and significant use of stairs. Basements were less common and attached garages became the norm.

1990-2000’s

NW Contemporary and Traditional subdivision homes, inspired by the Growth Management Act of 1990, brought smaller lot sizes to the overall region. The NW Contemporary transitioned into styles that were easily replicated en masse with three car garages, additional rooms, and more bathrooms tucked into a tighter and more efficient package. Traditional home styles emulating earlier 20th century Craftsman and Tudor designs made a comeback with more open floor plans, larger bedrooms, kitchens and family rooms. Formal living and dining rooms began to fade and be replaced with larger universal spaces.

2010-present

Ultra-Modern homes, often with boxy structures and statement or flat roof lines dominate the homebuilding scene. Open floor plans, significant use of windows, very small lot sizes, extreme energy efficiency and smart home technology have become the norm.

 

Major milestones in home building standards:

Washington’s first energy code, adopted in 1977, was a voluntary requirement, and as such was not well adopted by local home builders. The first statewide energy code applicable to all new buildings came to be in 1986.

Good – Significant improvements in the energy efficiency of homes didn’t occur until 1990, when the Revised Code of Washington required energy-related building standards and increased the insulation requirements for residential buildings. The State Ventilation and Indoor Air Quality Code was also established at that time. The code was amended in 2001 to include increased envelope insulation requirements for residential buildings.

Better – The Washington State Energy Code was made effective July 1, 2007, setting even higher energy efficiency standards for residential construction.

Best – The energy code was updated again in 2015 and is contained in the state of Washington Administrative Code (WAC), (Chapter 51-11).

See the International Code Council for Washington State, the WSU Energy Program, International Building, Fire, Residential and Mechanical Codes, and the Uniform Plumbing Code for more information.

 

Good years and more cautious years in building:

A good rule of thumb to keep in mind is that homes built during economic downturns (when times are tight) or significant booms (when builders build as fast as they can to meet demand) are often lower quality than homes built when the economy and demand are more stable.

That said, not all homes built in the same era are equal. Some builders deliver solid quality regardless of the cycle while others jump in only when they can turn a quick profit. See below on how to investigate builders.

Every homebuilding era has its upside and its challenges. A good home inspector can evaluate any specific home to determine what deficiencies exist. Here are a few era-based issues we see come up again and again:

Pre 1950 – knob & tube wiring, post & pillar foundations, inferior sewer piping (especially 1940’s), asbestos, lead-based paint

1950’s & 60’s – asbestos, inferior sewer piping, lead-based paint

1970’s – aluminum wiring

1980’s & 90’s – polybutylene/ABS plastic piping, horizontal furnaces/NOX rod heat exchangers, oriented-strand board (OSB) siding failure, exterior insulation and finish system (EIFS) failure

2000 & beyond – mold caused by improper ventilation in extremely efficient homes

 

Not all homes built (or remodeled) in the same era are equal…

In any market, there are entry-level builders, mainstream builders and high-end builders. Some builders even offer products that span the quality spectrum. Most of the time, these homes remain at that quality level through the years unless a major remodel or significant re-build occurs. As a home buyer, it is important that you evaluate the quality of each home so that you are comparing apples to apples and not giving equal weight to homes of different qualities.

Careful evaluation of a home’s components can help you with this process, as can a qualified inspector. It also helps to check out a builder’s history. This applies whether you are looking at newer construction or something decades old. Start by Googling the builder. Your real estate broker can identify them through the chain of ownership on the tax record.

In addition, home renovations may add another layer of complexity as you’ll not only consider the era of both the original construction and the remodel, but also the quality of the builder/contractor work in each.

Homes that are “flipped,” or renovated to sell, have their own special category. This is because the renovator’s primary goal is to create the most profit, which is directly at odds with renovating for the highest quality (something you would typically see when a homeowner remodels a home for their own use). One inspector put it succinctly: “I’ve inspected thousands of homes and I can count on two hands the flips that have been very well done.” It is more critical than ever to have a flipped home inspected thoroughly to ensure that no corners were cut in the process of giving the home a beautiful new veneer.

Homes that have previously been foreclosed on or were not owner-occupied (rentals) for many years also deserve careful evaluation for signs of deferred maintenance. They might have been maintained perfectly, but it never hurts to be extra careful.

In addition to Googling a home, neighborhood, and/or builder, you can check the history of any builder/remodeler on the State’s L&I Contractor database. The National Association of Home Builders and our local Master Builders Association also offer great resources to help you with your process.

Here are a few more great online resources to add to your knowledge base:

https://sdinspect.com/insiders-guide/

https://www.zillow.com/research/housing-stock-age-8148/

https://www.historylink.org/File/9116

 

Of course, nothing tops having an experienced pro to guide you through the process. They’ve seen hundreds upon hundreds of homes and can help you identify the solid finds from the duds hiding beneath a gorgeous veneer.

Choosing the right broker can save you thousands on your home purchase. Whether through local market knowledge and pricing analysis allowing you to make a smarter offer, recommendations and resources to thoroughly conduct your due diligence and avoid costly mistakes, or savvy contract negotiation to help you get the terms you need, having a Windermere broker on your side is an advantage you can’t afford to sacrifice.

 

Posted on August 26, 2019 at 4:48 pm
Julie Barrows | Category: Buyer Tips | Tagged , , , , , , , , , , , , , , , , , , , , , , , ,

How to Spot Big Issues Before You Pay for a Home Inspection

How to Spot Big Issues Before You Pay for a Home Inspection

 

Before you plop down $500-$800 for a home inspection, it really helps to identify obvious issues up front and determine if A) you are willing to buy the home despite them or B) the seller appears reasonable about addressing them. If neither of the above are yes, but you might want to keep looking rather than investing hard-earned dollars in an inspection that, at minimum, will bring up items that you can clearly see, and more likely, will unveil even more issues.

Taking a bit of time to do a quick personal inspection of the property you are ogling can help you make smarter decisions about when or whether to write that offer. This list includes bigger ticket items we often see come up in an inspection.

 

  • Evidence of moisture or water damage in and around showers or tubs and under sinks
  • Missing or cracked grout/caulk around the tub or shower (a major cause of rot in walls and the sub-floor)
  • Cracked, peeling or weathered exterior paint and caulking
  • Evidence of moisture or water damage around the exterior, especially at windows and doors
  • Heavy moss, sagging or a roof that looks near the end of its life span
  • Signs of improper drainage around the perimeter of home, driveway and yard
  • Unexplained mildew smell in the basement
  • Uneven floors or the appearance of leaning or sagging
  • Obvious remodeling completed with no permits on file (this is easy to lookup online), especially when involving opening or movement of walls, plumbing or electrical
  • Rotted or damaged deck/porch boards, stairs, railings, or supporting joists/structure
  • An aging heating/AC system (more than 15-18 years old and/or no recent maintenance stickers)
  • An aging hot water tank (more than 9-10 years old)
  • Aging appliances (more than 10-15 years old)
  • An electrical panel that appears modified by someone other than an electrician (obvious changes that don’t look proper, open breaker sections or loose wires)
  • Railings (inside or out) that are missing or not up to code (ie. your smaller toddler could fit through them)
  • Cracked or damaged foundations or retaining walls
  • Evidence of unstable soil/earth movement (slides, cracks or gaps, leaning supports/structure or trees)
  • Evidence of rodents (odor, droppings, chew marks or damage around exterior/vents)
  • Properties with a high likelihood for costly sewer line issues include those with very large trees near the most likely sewer line path and those more than forty years with no prior evidence of sewer line re-lining/replacement
  • Signs of home maintenance neglect such as broken or missing hardware or components, improperly functioning doors/locks

 

Not all these issues will turn out to be major expenditures, but they often can be. Better to note them early and decide if it makes sense to proceed with a more thorough professional inspection or walk away and save those dollars for a more likely candidate.

Here are a few great online resources to add to your knowledge base:

https://www.homeinspector.org/HomeInspectionNews/the-quick-home-inspection-checklist-what-to-look-for-when-buying-a-home.5-1-2017.1724/Details/Story

https://www.hgtv.com/design/decorating/clean-and-organize/common-problems-found-during-home-inspections

https://www.familyhandyman.com/smart-homeowner/tips-for-getting-the-most-out-of-a-home-inspection/

https://www.zillow.com/sellers-guide/bad-home-inspection-for-sellers/

https://wini.com/articles/home-inspection-checklist-a-complete-guide-to-the-home-inspection-process/

https://www.familyhandyman.com/smart-homeowner/home-facts-this-is-how-long-these-parts-of-your-home-should-last/

 

Of course, nothing tops having an experienced broker to guide you through the process. They’ve seen hundreds upon hundreds of homes and can help you identify the solid finds from the duds with gorgeous looking veneer.

Choosing the right broker can save you thousands on your home purchase. Whether through local market knowledge and pricing analysis allowing you to make a smarter offer, recommendations and resources to thoroughly conduct your due diligence and avoid costly mistakes, or savvy contract negotiation to help you get the terms you need, having a Windermere broker on your side is one advantage you can’t afford to sacrifice.


ABOUT WINDERMERE MERCER ISLAND

We earn the trust and loyalty of our brokers and clients by doing real estate exceptionally well. The leader in our market, we deliver client-focused service in an authentic, collaborative and transparent manner and with the unmatched knowledge and expertise that comes from decades of experience.

 

© Copyright 2019, Windermere Real Estate/Mercer Island.

Posted on August 13, 2019 at 9:08 am
Julie Barrows | Category: Buyer Tips | Tagged , , , , , , , , , , ,