Are your clients thinking about buying their first home? Perhaps they’re considering buying a second home, retiring in a different area or building their dream home? With out-of-area homebuyers who are unfamiliar with the area, they may not know which questions to ask or which problems to investigate.
As their agent, you can guide them to avoid buying a property that could easily become a money pit. Even a move to a nearby subdivision deserves a fresh look at the utilities, construction and environmental risks.
How to help out-of-area homebuyers
Inspect what you expect
In 2016, we decided to build a new home. I had specific requirements that I wanted: underground utilities, city sewer and natural gas for heating. The subdivision where we purchased appeared to meet all those requirements.
We received a list of utilities serving our MUD (municipal utility district). Because there were no visible propane tanks, I assumed that the area was on natural gas. When we were ready to move in, however, I was shocked to learn that our subdivision was on propane. It was piped in from a community storage tank. That meant that our heating bill would be two to three times higher than it would’ve been with natural gas.
Help your buyers verify their must-haves directly with the utility providers before they commit. In our case, I discovered that we had propane when we received a list of our utility providers with “Direct Propane” for our gas services.
How safe is the property in a specific location?
With water shortages, mold, fires and floods in the news, help your clients investigate the risks associated with the home they’re considering. For example, stucco construction is common in many places in the country.
When I told a local real estate agent that Texas builders had significantly increased the number of stucco homes they were building, she replied, “I would never buy a home with even a square inch of stucco on it!”
The reason? Stucco construction can crack. If the property is in an area where there is a high amount of rain and humidity, cracks can allow moisture into the walls, which can result in mold.
Many of the better builders are using products like Tyvek that reduce moisture problems with installed water-resistive barriers, drainage and flashing.
In a previous subdivision where we lived, several houses around us were built by a different builder who used a cheaper alternative. Sadly, the people who bought those homes experienced both moisture and mold problems.
It’s also important to encourage your clients to use an inspector who’s familiar with the area’s construction methods and moisture problems and to obtain specialist evaluations when needed.
Watch for these pitfalls in new subdivisions
Assume you’re showing a property on a beautiful, sunny day. One of the properties is a multi-story home with the garages on the first level and quite a few steps up to the front door. What your buyers may not realize is that the elevated living space could be a response to controlling local flood or storm-surge risk.
In new subdivisions, erosion, drainage and accessibility to septic, sewer and water are important concerns. No matter where you are selling, it’s always smart to check whether a house is in a floodplain. Properties located in these areas almost always require a separate insurance policy to cover the risk. FEMA’s flood maps are a starting point, but properties outside flood plains can still flood for a variety of reasons.
Pay special attention to the plumbing
It’s also important to determine whether the property is on septic or sewer. A buyer moving from an area served entirely by city sewer may never think to ask. If the property does have a septic system, make sure they have it inspected to see if it’s still adequate for use in its current condition.
Know about water rationing
Another key issue is accessibility to water, particularly in areas affected by drought. Lack of water can kill off landscaping, cause existing water systems to fail, and in cases where there is a well, individual wells can produce less water or run dry.
How to protect your clients
What can you do to protect your clients? Here are the steps to take:
- Thoroughly investigate the reputation of any of the builders whose properties you are showing. Search for complaints online about the subdivision or the developer.
- If your clients are building a new home in a subdivision where people are already residing, encourage them to ask neighbors how their experience was with the builder. What kind of issues did they have, and how responsive was the builder or developer in handling them?
- When clients are purchasing a new home, let them know it typically takes a full year for all the construction issues with the home to be addressed. This is a critical reason that new buyers should hire a professional property inspector to develop a punch list of items that need to be addressed prior to closing.
- If the property is in an area where there are earthquakes or landslides, recommend that your clients have a geological inspection in addition to their regular home inspection.
- Also be sure to have your clients carefully investigate the cost of insurance. Encourage them to obtain property-specific quotes early and comparison shop on prices and coverage. Have an insurance professional explain deductibles, exclusions and any need for separate flood coverage.
- If your clients are purchasing a resale, ask the seller to obtain a copy of the property’s insurance claim history through the Clue Database. Review that information alongside the seller’s disclosures and inspection findings.
Careful research prior to closing is the best way to protect your clients and their investment. Begin early enough for them to act on the findings before their contract deadlines. Your local knowledge can help them identify the questions they didn’t know to ask and that could have cost them incredible amounts of money if they did not know about them.
Bernice Ross is president and CEO of BrokerageUP and RealEstateCoach.com, the founder of Profit.RealEstate and a national speaker, author and trainer with over 1,500 published articles.
