It seems obvious to me that the group of home buyers that were most singled out, and blamed for the sub-prime mortgage crisis is the very group of home buyers that will lead this home market out of the depressed cycle of fear and loathing that it previously suffered from. The phone has been ringing with folks needing to solve home drainage problems prior to closing escrow on a new home.
Home buyers in the Portland, Oregon area, especially the younger ones, seem to have caught on, to what looks like a great time to buy a home. For what ever reason, it appears like the Portland home market has a up swing in housing interest again, and not a moment too soon.
With tax credits that are hard to beat, and prices driven to adjusted values, first time home buyers are coming into the market significantly.
I met with 4 couples this week, concerning the results of their home inspection, on the home they wished to buy. All of these prospective new home owners had written an earnest money agreement to purchase the home, and upon the results of the home inspection were told that their was groundwater in the crawl space or basement, or evidence of past groundwater in the basement or crawl space.
Both present or past groundwater evidence will get you declined for the loan, without coming up with a home drainage groundwater solution, in almost all cases. Even, as a home buyer, if you could pocket the cash that the seller had agreed to give you off the price, by the time you got around to financing and making the home drainage deferred maintenance work a priority again, the cost would likely have doubled or tripled.
It is important for all home buyers, everywhere, to read about how to proceed under these conditions. These times require a correct home drainage judgement call, with respect to the severity of the groundwater problem, as well as the best place to locate a drainage system solution, if one is required, and if one can be installed effectively. If you do not understand the levity in that which I say, your chance of winding up with a home drainage money pit is much enhanced.
The most important aspect to protecting yourself from falling into a home drainage money pit problem home, who’s home drainage problem can not be solved, is to write the original inspection/repair contingency in the earnest money agreement liberal with respect to the cost cap the seller agrees to shoulder, should a home drainage problem, or any other repair problem that might come up arises. The best protection is to use the buyers due diligence information for diagnosing home drainage problems prior to writing offers on real estate in the United States.
If the seller does not agree to put up the money for repairs in the end, you walk away with only the money lost at the lender, for the inspection report price and the appraisal price. Still, you get burned for more cash and must find another home to buy. That is not your objective, is it? What if your old home is already closed? OOps. You are homeless my friend, looking for a motel for how long?. Ouch!
Realtors have been putting in $1500. in the repair caps section of the earnest money agreement, to protect their sellers from having to come up with any cash before closing, for 20 years or more. Home buyers are seeing the power of having the seller caught in a market where, if they want to close on the home, the home drainage repairs or any other repairs, usually known by the sellers for a long time, are finally dealt with prior to closing of escrow. If you are a buyer, do not miss this chance to solve the problem. Do not take money, given to you at closing by the sellers to solve the drainage dispute, off the price as a home buyer unless you can double that amount by the time you become the seller, which will be needed to solve the drainage problem at that time, or be just “forced” out of finances, to lie about the condition of the property when you sell it.
Home buyers, watch out. Due your due diligence. Read about how to do that on this site. Get yourself a good buyers agent. They are free to you. The buyers agent gets part of the commision fee, between 5%-7% of the purchase price typically, that the seller would have paid the listing broker solely, if he had sold the home himself.
Don’t move fast, and sometimes not at all, where a real estate agent represents both parties. Get your own buyers agent, for your own representation. You are not paying a fee, true, by allowing joint representation, but you are missing free individual representation by not getting a buyers agent. They are free to you the buyer.
Realtors still use the same earnest money agreement repairs cap figure as they have for decades, even though the price of the average home in that time may have doubled or tripled in value.
The repairs amount cap as a contingency is important and should be set at more like $3000. or more if you already suspect there is extensive drainage work needed, instead of the default, max $1500.
Home drainage problems are not solved by just installing a sump pump that does not prevent the groundwater from entering below grade in the first place. Don’t get soaked.