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What every smart home buyer knows -- Page 2

When you walk through the basement or stick your head in the attic, do you smell mold? Are there pots and pans to collect water?

In the basement, look for water marks on the walls, says Irwin. "If you see that, it would indicate that, in some time in the past, water has been there."

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Test out the heating and air conditioning systems. "Something I'm finding in a lot of new construction is messed up HVAC systems," says home inspector Kurt Mitenbuler, president of Kurt Mitenbuler & Associates in Chicago. In trying to cram more space into a home, he says, builders are putting vents and ducts in less than optimal places. As a result, "people are building million-dollar homes that don't heat or cool properly," he says.

You're also looking for signs of quality, says Gladstone. What are the materials that are used in the home? Are they typical of the neighborhood?

Too many times, he says, potential buyers are focused on the wrong things. "Everyone worries about the furnace," says Mitenbuler. "But furnaces are one of the cheapest things in a house (about $3,000)," he says. "In the market I work with, a couple of broken windows can be $3,000."

And if you are planning on remodeling yourself, make sure the home is up to the job.

"Everybody worries about load-bearing walls," he says. "That's the easy part." The real test? "Where's the duct work? It's not so much about where the load-bearing walls are, it's about where are the mechanical systems."

What you don't know
"Talk to the present owners. What sorts of things have they done to the house while it's been in their care?" says Katen. If they've done a lot of the work themselves, "proceed with caution," he says. "Next to water, a house's greatest enemy is an eager homeowner/repairman."

You also need to find out about the environmental factors. "In houses built before 1978, the odds are they used lead paint," says Ron Phipps, broker with Phipps Realty and Relocation in Warwick, R.I. "The cost to cure can be significant. You need to know that going in, and you need to be aware of what the state laws are."

Ditto radon, mold and asbestos. What hidden problems are lurking? What will you need to do to feel comfortable with the house?

Verify any ongoing costs like utilities and taxes.

And if you're buying a condo, ask about special assessments. Just nine months after moving into one home, Phipps was hit with an assessment for a new roof. "It was $3,800 I didn't anticipate," he says.

What he learned: ask the condo manager and the head of the association how many assessments they've had in the past three years, how many more they anticipate and what kind of reserves they have for capital improvements.

Play detective
Even before the home inspector comes out -- and don't buy a home without one -- there are things you can do to detect problems.

"There is no reason in the world when you're walking through the house with the [agent] or owner not to do a mini-inspection," says Gladstone. "Most sellers are prepared for that."

So open those kitchen cabinets, the oven door and the dishwasher. Check out the refrigerator if it comes with the house.

"Go in the kitchen and turn on the microwave and see if the lights dim," says Strong. "Turn on the air conditioning and see if the lights flicker. If they do, the wiring could be undersized."

How old are the pipes? If it has a new bathroom, or you're planning to install one, can the existing plumbing and hot water heater handle the job?

Want to know the real story behind your house? Hire your own home inspector before the closing and go with him when examines the house. "It's critical," says Gladstone.

Going up?
Real estate professionals often sing the praises of location, location, location.

"Particularly in the higher priced neighborhoods, the value to the property is the dirt it sits on," says John Aust, president of the National Association of Real Estate Appraisers, a professional trade group. Are you near a shopping village and parks? Or is a superhighway going to be your new neighbor six months from now?

Phipps agrees. "It's not just having a nice address," he says. "It's analyzing potential for appreciation based on location, distance from adverse conditions and the likelihood that [the neighborhood] improves or stays the same."

Don't buy the most expensive home on the block. With property at the lower end of value in a neighborhood, "the chance of appreciation is greater," says Alan Hummel, CEO of Iowa Residential Appraisal Co. and past president of The Appraisal Institute, a trade organization of real estate appraisers.

To get a realistic picture, look at the home at different times of day, during the week and on weekends, says Phipps. "I'd see what the commute time is like at the times I'm likely to be traveling."

Call your insurance agent. "Previously, if the home had a [water or mold] claim, it can be difficult or impossible to get insurance," says Irwin. Also ask about flood plains, earthquake zones and any other location-related risks. If your agent has trouble getting the information before closing, have the current owner secure a copy of the property's insurance record (often called a CLUE report) for you.

Many times buyers are under "a lot of pressure and a lot of time constraints," says Gladstone. "They are willing to settle and make assumptions that might not be true. The more homework they do, the less likely they are going to find out they bought a lemon. The concept of 'let the buyer beware' is still a very strong one."

Dana Dratch is a freelance writer based in Atlanta.

-- Posted: May 16, 2005
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'05 Real Estate Guide
30 yr fixed mtg 3.73%
15 yr fixed mtg 2.71%
5/1 jumbo ARM 3.20%
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