Due diligence when buying a home

Due Diligence
Trust and Verify

If you’re a home buyer who’s ready to jump into the housing market this spring, you’ve probably begun searching to see what’s on the market. You may have already met a real estate agent or two; and if you’ve haven’t yet talked with a mortgage lender for a prequalification, it’s probably high on your priority list. Exercise due diligence throughout the home buying process.

Before you know it, you’ve selected an agent, mortgage lender, and title attorney to assist you. Then you find yourself searching for homes. Guess what? You’re well into in the process of buying a home! But before you put the buying process on cruise control, how much trust should you put into the professionals helping you?

Exercise your due diligence when buying a home.

It’s not to say that real estate agents, loan officers, home inspectors, or anyone else assisting your home purchase are not qualified.  But then again, some professionals are better than others. Buying a home is probably one of the biggest purchases you’ll make during your life. The saying “trust but verify” should be your mantra throughout the home buying process to ensure you exercise due diligence.

Have you verified the credentials of those you’ve hired?

Believe it or not, there are some who are doing business without the authorization of the corresponding licensing agency. And yet, some reasons given for not having a license may sound innocuous, such as forgetting about a license renewal deadline; other reasons may not seem as innocent (for example, licensed professionals from neighboring jurisdictions, DC or VA, attempt to do business locally where they are not licensed).

Professional licensing is a regulatory safeguard that provides consumers a pool of professionals that meet or exceed a minimum professional competency. Agencies such as the Maryland Real Estate Commission; Maryland Home Improvement Commission; Maryland Commission of Real Estate Appraisers, Appraisal Management Companies, and Home Inspectors; Office of the Commissioner of Financial Regulation; and the Maryland Insurance Administration offers an internet portal to verify a licensee’s status, check for disciplinary actions, and also explains how to file a complaint.

Although the MLS strives for accuracy in home listings, there are inaccuracies. The MLS provides guidelines and standards for home listing data.  However, exactness and truthfulness can vary because data input is performed by many agents and/or their staff. a disclaimer used by our local MLS prompts you to verify MLS listing information,

“Information is believed to be accurate, but should not be relied upon without verification. Accuracy of square footage, lot size, schools and other information is not guaranteed…”

Verify the schools are accurate.

You can verify schools by checking with the local school board. Our local school board has an online tool to check schools assigned to any county address. The tool is located here: Montgomery County Public Schools “School Assignment Tool” (gis.mcpsmd.org/SchoolAssignmentTool2/Index.xhtml).

Verify zoning, development and other information

You can verify zoning or development questions with your locality. Montgomery County allows you to check information online via Montgomery County Planning Department (montgomeryplanning.org).

Verify permits.

Sure the deck is beautiful and the basement is fully finished.  But how do you know that they were built to meet county code?  Maybe the home seller went with the lowest priced contractor who cut corners and did not pull a permit. Or worse, the seller did it themself to save paying a licensed contractor. Make sure any improvements and recent repairs have had the proper permitting! The permitting process certifies that repairs/renovations comply with building and zoning codes. Permitting ensures that houses are safe, structurally sound, and meet health standards. Permits can be checked by contacting your locality.  Montgomery County allows you to check most building permits online via Montgomery County Department of Permitting Services (permittingservices.montgomerycountymd.gov) “eServices” data search portal.

Most home buyers are familiar with basics of the home buying process. However, “trust and verify” can help identify and reduce hidden and obscure risks. Exercising your due diligence can make your home buying experience increasingly trouble free and more enjoyable.

By Dan Krell
© 2015

Original located at https://dankrell.com/blog/2015/01/16/trust-and-verify-home-buyer-due-diligence/

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Lack of Permits Can Create Future Problems

by Dan Krell
Google+

If you have ever tried to make improvements to your home, you may know about the permitting process. Unfortunately, do-it-yourselfers and some contractors often feel that it is unnecessary to obtain the necessary permits (including but not limited to building, mechanical, and electrical permits). Excuses given for not obtaining the proper permits range from the silly to the paranoid.

The purpose for the permitting process is to assure that buildings, land and home improvements adhere to the building and zoning codes within the county. The purpose for building and zoning codes are to ensure that our houses are safe, structurally sound, and help maintain health standards.

Although you may perceive that you can save time and money by not going through the permitting process, however, you may find that the shortcut will cost more time and money in the long term. It is not uncommon for improvements that did not go through the permitting process to be required to meet current building and zoning codes, or even be demolished. Decks, fences, and outbuildings are common violations because they can encroach on a neighbor’s property as well as being easily seen because they are not concealed indoors.

If the permitting process is not followed correctly, or (worse yet) if there were no permits for your improvements- there may be future consequences to you, the home owner.

First, it is not uncommon for insurance companies to deny claims related to home improvements that were not completed to meet local building code requirements. Having the necessary permits for home improvements as well as communicating with your insurance agent about them will save you heartache if there is a future claim related to those improvements. For example, if your new deck collapses and injures a guest, your insurance company may deny any claims if it is found that the deck was not built up to building code standards.

A second consideration is that you may run into an obstacle or two when you plan to sell your home. Having improvements that were not permitted by the Department of Permitting Services and passed by the building inspectors could have serious repercussions on your sale. For example, one home seller had the appraised value of his home reduced by the home buyer’s lender because the owner never obtained a permit to construct the large addition he added the year before. Additionally, a home buyer may require a seller to have such improvements be inspected by the county.

If you did not go through the permitting process for your home improvements and you decide to “come clean” (either voluntarily or because someone required you to do so), the county will have your improvements examined by an inspector. If you are lucky, you could get away with paying local and state fines. However, to meet building code, the inspector could require you to make minor repairs; sometimes, the improvements are ordered to be demolished.

As a home buyer, you should be concerned about a home’s permit history for the reasons stated above. You can check a home’s permit history by contacting the Department of Permitting Services (permittingservices.montgomerycountymd.gov).

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of May 19, 2008. Copyright © 2008 Dan Krell.