9 Things You Should Investigate During the Inspection Period
Buyers often go into the home purchase with all the excitement that accompanies buying something new. Granite counter tops, well-appointed bathrooms, hardwood floors...those are all things that are on a buyer’s must have list for their new home.
And while it’s not as exciting or interesting to think about all the things that could be wrong with a home, it’s definitely much more important than your granite countertops. You can always put in new countertops if you don’t like the ones that are in the home. Foundation problems, termite damage and pollution from nearby businesses aren’t as easily rectified after you close on your home.
Before I get into the things you should research during your inspection period, you should understand what the contract entitles you to regarding inspecting the property.
Why Do an Inspection?
The most important reason to do an inspection is because North Carolina is a Buyer Beware state. That means that the seller is not required to disclose anything about the property to a prospective buyer. But wait, there are some caveats to that statement.
Even though the seller is not required by law to disclose defects about the property, the listing agent is required to disclose anything that s/he knows or reasonably should have known about the property. Because of this, properties listed with an agent offer some legal protections to the buyer.
But even with those protections, the seller and the agent are not required to do intensive inspections to discover anything that might be wrong with the property. It is the buyer's responsibility to discover any defects to the property or any concerns that may affect the property during the Due Diligence Period.
You will put down two deposits when you make your offer. 1) The Due Diligence Deposit buys you the right to inspect the property during the Due Diligence Period. You have the right to terminate the contract for any reason or for no reason at all during the Due Diligence Period. However, the DD Deposit is non-refundable if you terminate the contract.
The other deposit is the Earnest Money deposit. The EMD, shows the seller that you have the means to complete the transaction. If you terminate the contract during the Due Diligence Period for any reason or no reason at all, your Earnest Money Deposit is refundable.
The following 10 things are important to explore while you are in your Due Diligence Period.
Anytime there has been work done on the property after the initial construction, you may want to check if there have been permits pulled for the work that was done. When a permit has been pulled, you know it was inspected by the local building inspector and that the work was up to building codes at the time it was completed.
That does not mean, however, that it is still to code. Because codes change over time, what was constructed 10 years ago, will likely not to be to current building standards. In most cases, this won't present a problem. Fortunately, your building inspector is required by law to disclose many code changes that were due to safety hazards.
2. Restrictive Covenants
Restrictive covenants are legal documents that govern property use. They are usually used to help maintain property values by providing guidelines for things that could lower a property's value, such as disabled vehicles, types of animals allowed and types or size of homes. They sometimes also govern lawn maintenance, paint colors, fencing materials, and more personal aspects of a home.
Not all neighborhoods have restrictive covenants but the majority do. If the subdivision has an HOA it almost certainly will have restrictive covenants. But even if there isn't an HOA, restrictive covenants may have been written and recorded in the public record. Your Realtor or an attorney can do a search for you to check.
Some restrictive covenants have an expiration date. In some cases, if a majority of the subdivision didn't meet to extend them, the covenants will no longer be valid.
Surprisingly, even if the property is not in a subdivision at all, it can still be subject to restrictive covenants. If it's a concern to you, it's always best to investigate.
3. HOA Dues
HOA or Homeowner Association Dues are used to maintain the common areas of a subdivision, things like greenspaces, pools, tennis courts and other amenities, lights, and sometimes road maintenance, if the roads aren't public roads.
Different subdivisions have different by-laws and their dues cover different things. For example, in a town home community, the exterior of structures (roofs, siding, landscaping) is commonly paid for by Association dues, but don't assume that is the case without investigating it. Of course, when exterior structures are maintained by the HOA, the HOA dues tend to be much higher, but just because they are high, that doesn't mean they cover a lot. I have seen situations where the dues were very high but all they covered were green spaces and lighting.
Before you purchase a home in an HOA, find out how much the fees are, how often they must be paid and what they cover.
If you have a particular use in mind for your home, zoning is going to be important to you. Do you have a home business or plan on working on your friends cars in your garage? Do you want to get a few chickens in your backyard? Were you thinking of subdividing your large lot and selling off half of it? These are all things that might be governed by a zoning ordinance.
Other things that can be regulated by zoning are:
Before making plans to do anything to your home, check the zoning ordinances with the planning and zoning department to make sure you are in compliance. If there is something specific you wish to use a property for, check zoning during the Due Diligence Period.
5. Road Maintenance
Did you think all roads were maintained by your local Department of Transportation? Think again! In North Carolina, some roads are public and some are private. Public roads will automatically be maintained by public funds. But if you're purchasing a home with a private road, you should check if there is a private maintenance agreement to maintain the road.
If the subdivision has an HOA, it is likely that the HOA pays to maintain the roads -- but make sure to check this! The Department of Transportation will only maintain roads if there is a clear benefit to it's residents. For example, in a new subdivision, until the neighborhood has filled up to the point that there is a substantial tax base, the DOT is unlikely to take responsibility for the roads.
And if the builder skimped on the cost of road building and didn't build them to DOT standards, it is unlikely that the state will ever take on the responsibility of maintaining the road. In this case, the neighborhood should have in place a Road Maintenance Agreement. This agreements should spell out the responsibilities of residents including shared costs for maintaining the road.
6. Sex Offender Registry & Crime Maps
It's a sad fact of life that not everyone our children encounter will be safe. Fortunately, we also have the resources to research who will be living near our children so we can keep them safe. You can research any address by plugging it into the NC State Bureau of Investigations Sex Offender Registry Search.
For crime data, you can enter the address of the property at WRAL's interactive crime map to get an idea of how safe your prospective property is.
The state of North Carolina has embraced the school choice movement. In addition to your local public school, we have options such as Charter Schools & Magnet Schools that are free and open to the public. Some of these options are especially interesting such as the Early College Magnet schools that allow your student to graduate with 2 years of community college already completed. Also, there are even publicly funded boarding schools such as NC School of Math & Science and NC School of the Arts.
Because of the school choice movement, it isn't always clear which school a home is zoned to. Some of the most popular schools have enrollment caps. Some schools experience redistricting due to population growth. In the Triangle, it's always best to check directly with the school system rather than relying on what is listed in the MLS when determining your child's school assignment.
For lots ore information about schools in the Triangle, read Charter School, Magnet School, Traditional School: All You Need to Know About Wake County Schools.
8. Noise Pollution, Future Growth
To some people, the noise that trains and airplanes bring is so commonplace that it feels homey to them. To others, road noise, air traffic, railroad tracks can all bring unwanted disturbance to your quality of life. Before you purchase a home, make sure you check flight paths, train schedules and for any new major construction that may be planned for in your area such as the I-540 Expansion.
9. Property Lines
For some reason, many buyers like to skimp on the cost of doing a survey. But a survey is vitally important and can potentially save you a fortune in the future. The following is a based on an actual scenario that happened here in The Triangle. Imagine this:
You buy a beautiful home on a 2 acre lot in Raleigh. Your favorite feature of the house is the huge detached garage with the extra parking pad. It connects to the home with a brick archway that adds so much to the character of the home. You love it! It will allow your many frequent guests to park comfortably without clogging up the road.
This property was bank owned and you are getting a great deal! You close on the home and one year later a for sale sign goes up on the land next door. What you didn't realize is that your home used to be a part of the neighboring lot. The owner was short on funds so he subdivided and sold the lot to a family member. Eventually, the owner was unable to make his payments so he let the bank repossess the home. When he sold the other lot, he had to do a survey, but in order to make it as cheap as possible, he had the surveyor divide the lots...right through the archway of the connecting garage wall!
You are now faced with negotiating a solution to the problem with the new owners of the land. This may involve court costs if you can't come to an agreement. It may involve an additional cost of purchasing the land the garage is sitting on or the removal of the garage. If you had had a survey done before the purchase, you would have been aware of the situation in advance (when your negotiation power was more positive) and possibly could have negotiated an acceptable solution with the previous owner.
Always, always get a survey before purchasing a home.
For more reading on buying a home check out these informative articles!
Top 10 Things Sellers Try to Hide by Xavier De Buck
What to Consider When Buying an Older Home by Paul Sian
10 Items to Check Before Falling in Love with a House by Andrew Fortune
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Ellen is the founder of Harmony Realty, a socially conscious realty company. Ellen believes in empowering her clients through education and open communication. Ellen is a number-cruncher at heart and takes great pleasure in following and analyzing the trends of the housing industry. She loves communicating the big picture to her clients and helping them to understand how the market affects their sale or purchase. Her honest and down-to-earth approach allows her clients to make informed and intelligent decisions to get the most out of their offers and negotiations.