Costly Pitfalls To Avoid When Purchasing a Home
What if I told you that before you purchased that house, you could have avoided a very costly pitfall before you ever took possession would you be interested in? That is why it is important to aware of what pitfalls to avoid when purchasing a home.
Pitfall No. 1, The 60 Amp Service
To the unsuspecting buyer and often their realtor, you fall in love with a house. You do your due diligence and you and your realtor inspect the electrical panel and it says 100 amp service. To the unsuspecting buyer many think this must mean the home has a 100 amp service right? WRONG!
The result: In order for you to be eligible for a mortgage you need to insure the property in case of fire, etc. In this case insurance companies will only insure the home if you pay to upgrade the service once you take possession. The cost for this service upgrade as soon as you move in.
Approximately $4000
What To Look For To Avoid This Costly Pitfall?
You want to look at the meter on the outside of the house.
60 Amp Service
100 Amp Service
Pitfall No. 2 Knob and Tube
Again another pitfall to avoid when purchasing a home is Knob & Tube. Like the 60 amp service, insurance companies refuse to insure a house with knob and tube. Although the ESA does not deem knob & tube unsafe, insurance companies do. Again if you can't get insurance, you can't get a mortgage and you can't buy the house. The cost to remedy this pitfall as soon as you move in:
$6,000 - $12,000
What To Look For To Avoid This Costly Pitfall?
Knob and Tube Wiring
Pitfall No. 3. An Old Furnace
Just as you are getting ready to close on your new purchase, your insurance company sends you a curve ball and asks for an inspection on your furnace. In a few cases insurance companies have asked for the furnace to be inspected based on information provided in the home inspection report or the age of the home.
Or this is your first winter in your new home and after a month you discover your furnace is no longer working. Low and behold your furnace has expired and you find yourself seeking emergency services to either get your furnace working temporarily or to install a new furnace for which you will now pay a premium. The cost to rectify this costly pitfall:
$6,000 to $12,000
If you have a gas furnace and the furnace is old, insurance companies will want to confirm there are no gas leaks.
If it is an oil burning furnace the insurance company may want to inspect the location of the furnace and its proximity to any heat sources, leakage and surrounding contamination and the biggest danger to owning an oil furnace, carbon monoxide leakage.
What To Look For To Avoid Purchasing A Home With This Costly Pitfall
The life expectancy of an oil furnace can range from 30 - 35 years, you will need to determine whether the furnace has been properly maintained, the amount of oil in the tank, and whether the chimney flutes are clean and free of debris.
The life expectancy of a gas furnace can range from 11 - 25 years depending on the quality and maintenance of the furnace. Rarely when you look at the furnace will it tell you the date of installation. However, when dealing with a gas furnace you can often tell the age of the furnace by the serial number.
If the furnace doesn't have a serial number there is good chance it is more than 30 years old. To determine the age from the serial number: Some serial numbers can be interpreted by weeks and years. So a number reading 1193CA4567 would be dated as the eleventh week of 1993. According to Inspectapedia website, in the article, "How to Determine Furnace Age", serial numbers from furnaces made after the year 2000 are easier to decipher. The serial number might have a six-digit code at the end; for example, 67890-3011606 which yields a furnace date of June 2006. To read more on furnace age, click here.
Pitfall No. 4. You Need A New Roof
The best way to avoid leaking in your home and more costly secondary problems is to ensure the roof on the home you're purchasing is in good condition. Depending on the condition of the roof, if the roof has not been replaced or maintained for a considerable amount of time you may require more than just shingles, you may need to replace the plywood underneath, which depending on the extent of the damage, can run up your bill in to the thousands.
The cost will depend on the type of roof, the size of roof, and the extent of the work:
$6,000 - $25,000
What To Look For To Avoid This Costly Pitfalls
Old Roof Shingles Needing Replacing
Too Many Layers Of Roofing Shingles, All Will Need To Be Ripped Off and Replaced
Before hiring a home inspector, you can often tell the condition of the roof simply by standing back and looking at it. Are the shingles broken or missing? Are there multiple layers of shingles already? You will need to determine if the roof requires a simple patch fix, or if you can suffice with a rollover (another layer of shingles) or if you need to rip and replace. If you are not comfortable getting up on the roof to inspect it and you suspect the house needs a new roof you will need to hire someone like a home inspector.
Pitfall No. 5. The Leaky Basement
You come to a home you think you would like to purchase. You walk through the living space and your falling in love, you descend to the basement and your nose is hit with a musty smell. Depending on whether you want to finish the basement or use it for storage, water in the basement can become a breeding ground for hazardous mold. It is important to source the cause of the water. Some basements have been constructed below the water table and if this is the case, water seepage has less to do with leaking and more to do with hydrostatic pressure. Other basement leaks could be caused by cracks in the basement, which needs repairing to simple and less costly repairs like property grading or eaves-trough replacement.
The cost to repair a leaky basement: $500 - $25,000
What To Look For To Avoid This Costly Pitfall
You can often smell a damp basement and that is your 1st telltale sign there is a leaky basement. The next thing you should do is investigate signs of water penetration such as:
Efflorescence ~ the white deposits which indicates water penetration
Efflorescence
Dark water marks
Dark Water Stains
Mold
Mold
Pooling in the middle of the floor
Hydrostatic Pooling In The Middle Of The Floor
You will need to investigate the cause of the water and bare in mind there may be more than one source of water penetration. Inspect the grading of the property, does water run toward or away from the house? The condition of the eavestroughs, are they hanging down? Do they need replacing? Also pay attention to where the downspout is directed in relation to the grade of the property. Believe it or not, although you may think you've hired a professional to install your new eavestroughs and downspouts, a professional should know you always install the downspouts to ensure the water runs away from the house not towards it. Next check out the walls of the basement. If there are problems with the weeping tiles and cracks in the walls you may find the previous owner has attempted to finish and insulate the basement. Here you may find mold or water staining in the insulation.
Check the plumbing. Leaky pipes can also be a source of water penetration.
Is there evidence water has been puddling in the middle of the floor? This can be an indication of hydrostatic pressure which will be an indication of a very costly repair.
Your best approach is to try to investigate any signs of water penetration first, then bring in a professional for confirmation.
Pitfall No. 6, Galvanized Steel Pipes
You have been looking at a resale home and have come across a beautiful century home, lots of character and appears to have been renovated. Low and behold you go down to the basement and the supply pipes are steel. Galvanized steel pipes were commonly used until the 1950s/60s. The problem with this type of plumbing is it has a shelf-life of 20 - 50 yrs. After which time, the zinc layer of the pipes erodes and it develops a build up inside the pipes for which you will begin to see a reduction in your water pressure.
The cost to replace the plumbing: $4,000 - $12,000
What To Look For To Avoid This Costly Pitfall
Corroding Galvanized Steel Pipes
You may or may not have visible access to all the plumbing in the home. Below are two ways to check for this costly pitfall.
- To test for water flow restrictions, turn off all valves and faucets inside your home and allow them to remain off for at least fifteen minutes. Then, choose a faucet on the lowest floor of your home and turn it on; if there is an initial “burst” of water and good pressure, but then the water flow dwindles noticeably, you may be facing internal pipe corrosion.
- Another way to check for problems with galvanized steel pipes is to examine fittings where galvanized pipes connect with other pipes. If you see white, powdery residue and/or water leaking, then you should suspect that galvanic corrosion is destroying your pipes.
To read more on galvanized plumbing click here.
Conclusion
If you are buying a home and you come across a costly pitfall, you have 1 of 2 options:
- You can avoid buying the house altogether and find another house or
- You can negotiate your offer to account for the unforeseeable cost.
Remember you always have options before you commit yourself to buy the home. It becomes a lot more difficult to recoup the costs or walk away from a contract after you have committed yourself to the contract. It is therefore important to educate yourself before you buy so you know your options and have an idea of your costs before you're stuck paying the bill!
About The Author
Rachel Craggy has a license in real estate and has been working in the real estate industry for the last 10 years. Successfully flipping houses since 2015, Rachel has education in interior design and real estate staging, was the owner of a success home staging company in Toronto and has worked with many home owners to help them achieve their real estate dreams.