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Do You Make These Critical Home-Buying Mistakes?
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Do You Make These Critical Home-
Buying Mistakes?
Gary Wong, MBA
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Table of Contents
Introduction ............................................................................... 3
Is there Oil in the Soil? ................................................................ 4
Defects That Go Undetected ........................................................ 6
Stigmatized Properties................................................................ 9
Step 1 Call City Hall .............................................................. 10
Step 2 Google the Address ................................................... 10
Step 3 Follow the News ........................................................ 10
If You Dont Mind, Save Thousands!......................................... 12History and Location ................................................................ 14
About The Author ...................................................................... 17
Contact Information ................................................................. 18
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Introduction
Buying a used car for a few thousand dollars and finding out youve bought a lemon is pretty
bad. You take it as a learning experience and you bite the bullet.
BUT buying a house for several hundred thousand dollars and finding out its a lemon is the
WORST POSSIBLE SCENARIO! Its not a common scenario but its also not a rare scenario.
Below Ill point out some critical issues where if youre not careful, you could end up buying a
lemon.
But Gary, I always do a home inspection
For a used car, you can always use a mechanic to do an inspection, and for homes, you can use
a home inspector. Ive met a lot of excellent home inspectors, but Ive also met some and
heard of others who arent that good. Home inspectors arent perfect. They miss out on things
occasionally due to a lack of experience, training or just carelessness.
Really?
Yes, did you know that home inspectors have liability agreements and insurance in place so that
they are covered in case they miss something?
Moreover, there are things called material latent defects, which are defects to the homes that
are typically not detected by a home inspection. Here are some obvious signs to look for and
some PRICELESS tips to avoid this calamity.
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Is there Oil in the Soil?
1. Home Inspection AND Oil Tank Inspection First of all, buyers should almost always do a
home inspection when buying a used home. This is a given.
However, an oil tank inspection is often necessary if the home is an old timer. In the olden days,
homes were powered by oil. An oil tank was either buried underneath the ground on the
property or located above ground on the property.
When homes began using electricity and gas as power, these were supposed to be
decommissioned and removed but manyjust had their tubes tied, but not removed. This can
cause several problems.
FIRST, most banks wont lend to buyers if theres an oil tank on the property.
SECOND, many insurance companies wont even insure properties that have an oil tank on the
property as well because of the potential insurance liability.
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THIRD, these tanks can leak. BIG PROBLEM!
These tanks have a lifespan of about 20 years and after that, oil can leak out of them and if it
leaks to your neighboring properties, you could be required to hire an environmental
consultant due to the soil contamination and a lawsuit could be on your hand.
How do I find out if theres an oil tank on the property or not?
Ask the listing agent. Most sellers who are aware of the oil tank will have hired an oil tank
company to have it removed. If the sellers arent aware (as most arent), theyll just hire an oil
tank company to do an oil tank inspection and if none is found (to the best of the companys
ability), an oil tank inspection certificate will be provided to the seller.
Mistake #1
Not doing an oil tank inspection IN ADDITIONto the home inspection.
Solution #1
Find out if theres an oil tank. If there is, have the seller remove it before making an offer. You
could also have your buyers agent write up the offer with an oil tank addendum attached to it.
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We obviously didnt believe that. The sellers had an obligation to disclose this material latent
defect and it is something that we could take them to small claims court for. However, to go
through the hassle of hiring a lawyer and taking the sellers to court over $300 was not worth it
in my sellers opinion.
Also, in court, my buyers lawyer would have had to PROVE that the sellers had prior knowledge
of the mice infestation in order to convict them of misrepresentation which might be difficult to
do.
Mold is another one of those things that can sometimes go undetected. If its really bad, home
inspectors and buyers can smell it. Home inspectors will have a water detector to test if theres
water behind bathroom floors and walls.
But as mentioned above, home inspectors dont check every single nook and cranny and willsometimes not check the insides of a closet or behind certain furniture where mold can grow.
Sometimes, you can spot water damage as there are marks, but due to lighting, or walls hidden
by furniture, it can easily be missed by a home inspector.
What can I do to prevent this situation?
Well, honestly, theres not much you can do. Be aware about these kinds of issues and talk
with your Real Estate Agent about these concerns.
When buying a home, make sure your Real Estate Agent writes a legally binding clause like this:
The Seller warrants that there are no stains, holes, marks or other such damage either behind
or under wall coverings, area carpets, mats, furniture or appliances which are not either readily
visible to the Buyer or reasonably expected by the Buyer.
This clause will at least protect you in that it gives you a right to take the seller to court if they
have hidden some defect from you and the home inspector.
Mistake #2
Not understanding about material latent defects
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Stigmatized Properties
What are these?
3. StigmasA stigmatized property is a property where buyers may avoid because of reasons
that are not related to the propertys features. These include the following:
If someone has died in the home either via murder, suicide or natural death
If the sellers have AIDS or some other contagious disease
If the home is known to be haunted
If specific crimes or gang activity have taken place at the home
If the home used to be a grow op
If the home was owned by a famous criminal
I know what youre thinking:
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How can I find out about these?
Here are some steps to take:
Step 1 Call City Hall
To find out whether it was a grow op, just have your Real Estate Agent contact the City Hall and
see whether they have record of that. If the grow op was discovered, then the city must have
been called in to get it remediated and to issue a re-occupancy permit.
Also, you can ask the listing agent. The listing agent has a duty to disclose any known stigmas
to potential buyers. Dont necessarily rely on the listing agent because if the seller didnt reveal
it to the listing agent, then the listing agent cant say if he/she doesnt know.
Step 2 Google the Address
Google the address. My client wanted me to buy a property for him that was a foreclosure. It
was tax assessed at $2M, but asking $1.3M. It looked like a great deal, but when I googled the
address, I learned a few things.
The home on acreage had been raided by the police because the land had several crates filled
with smuggled tobacco.
The home belonged to a famous crime lord and criminal activity was often present at that
address.
Step 3 Follow the News
One of my best friends is an RCMP officer, part of the integrated homicide unit. He told me of a
murder in an apartment in Richmond.
It was public knowledge and so it was on the news and I also googled the story online and
found the address.
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If youre afraid of buying stigmatized properties, take note ofthe addresses. When you hear of
this stuff, you may want to keep a little notebook and record these addresses.
On the other hand, I helped my client buy a brand new 1 bedroom apartment in Surrey. It was
a 2 tower development and he was interested in Tower 2. It was one of the last homes that the
developer was selling and had been on the market for more than a year. Nonetheless, the
developer offered us a great price.
However, a few days before the deal was going to go firm, I heard on the news that a stabbing
took place at the location of the apartment. I read the news online and indeed someone was
stabbed on the weekend in the visitor parking lot of Tower 1.
My client was a little concerned but he really didnt mind, but I took advantage of this
opportunity and used it as a bargaining chip. I took this news to the developer and I was able to
knock several thousand dollars off of the agreed upon price.
Mistake #3
Not finding out about existing stigmas thatll make you run the other way.
Solution #3
Talk with your Real Estate Agent if you have any specific stigmas you are concerned about.
Obviously, you are not going to be asking those questions to the listing agent for every home
you see, but if youre interested in the home and about towrite an offer, ask the questions.
Some people dont mind stigmatized properties as long as they get a big discount.
This brings me to my next point.
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If You Dont Mind, Save Thousands!
Some people will NEVER buy a stigmatized property no matter what. However, many buyers
will overlook the stigmas associated to the property if the price is right.
If youre one of those buyers who dont mind, take advantage!
Heres an opportunity for you to save thousands of dollars. Stigmatized properties are harder
to sell. They often sell at below market value but sellers will often price their home as if the
stigma didnt exist.
Mistake #4
Not knowing how to take advantage of stigmatized properties
Solution #4
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Work with your Real Estate Agent to determine the market value of the home as if it had no
stigma. Then discuss with your agent how much of a discount you can get with the stigma
attached.
Its often a win-win situation. The seller knows the stigma is a problem and they know the
property will likely have to sell at a discount. Use this to your advantage to save thousands of
dollars!
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History and Location
4. Property History and LocationWhy is it important to know the history?
If its an apartment, who was the developer? Is the developer reputable? Do they have ahistory of building problem buildings? Are they a new, unknown developer? If so, what kind of
support can I expect from them? Will they stand behind their product?
These are all questions you need to take into consideration. One caveat is that just because it
was built by a reputable developer, doesnt mean the building wont have significant issues.
One of my clients properties is a penthouse built by a reputable developer in the business for
decades. But, unfortunately, this building has had a lot of problems. Just by looking at it, you
can tell the quality was just mediocre. But, further investigation found out that this developer
has built other buildings that have had some similar issues.
What if its a home? For homes, look at the ownership history. Are you the 2nd
owner, 3rd
owner or? Has the home been changing owners frequently? Why is the owner selling?
Check with your real estate agent to see the propertys history.
Gary, Why is this important?
Well, if the owner has lived in the home 30 years, chances are, the homeowner has taken care
of the home and done its regular maintenance. If they didnt, the home would be falling apart
and it would be obvious.
If the home has been changing hands frequently, you have to wonder, Whats wrong with this
place? Does the home have a troublesome neighbor? Is it a stigmatized property? Are there
some structural issues or material latent defects?
Most buyers are aware that location is very important. Is it close to a school, park or
community center? Is it convenient to transit and shopping? Location is often important not
only for lifestyle but when it comes to selling your property.
Gary, it doesnt apply to me. Im planning on living there forever.
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If the home is beside or near an active railroad track or skytrain
Some of these may be common sense to you, but some you may be unsure of why they affect
the ability to sell the property. Talk to a knowledgeable Real Estate Agent and he/she canexplain the reasoning behind them.
Other tell-tale signs you should be aware of is the history and location of the property. For
apartments, pay attention to who the developer is. For houses, find out whether the seller has
lived there for a long time or not.
Most buyers dont live in the house they buy forever, so consider the location and how that can
affect the ability to sell it in the future.
Mistake #5
Not learning about the propertys history and location stigmas.
Solution #5
Ask lots of questions to your Real Estate Agent. A propertys history and location stigmas can
affect whether the propertys priced well, overpriced or something to stay away from.
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About The Author
Gary Wong is an Award Winning, Full Time, Full Service Real Estate Agent
servicing buyers and sellers in the Vancouver area. He is known for his no
obligation, no pressure approach where his sole goal is to love and serve his
clients.
His business is based on 3 key foundations: Ethics, Honestyand Integrityand
his business motto is Here to Serve.
Gary did his undergraduate studies at UBC and his MBA at SFU. He brought his years in the
workforce along with his business education into real estate, differentiating himself with his no
obligation, no pressure approach.
When Gary first entered the real estate industry, he saw how the public viewed Real Estate
Agents as shady, unethical and unprofessional which immediately compelled him to establish a
new standard in the industry. After interviewing 7 brokerages, he finally chose Macdonald
Realty, a real estate brokerage famous for its focus on ethics, integrity and producing highly
trained and qualified Real Estate Agents.
Through hard work, long hours, guidance from his mentors and his strategic approach, he was
able to establish himself as a trusted expert among his friends and he won the Sales
Achievement Award at his company in his 1st
year.
Gary strongly believes in serving the needs of others and believes that no 2 clients are the same
and so his consultation adjusts and adapts to every single individual he meets.
Passionate about this industry and its reputation, Gary is committed to doing things RIGHT. He
is also an advocate for continuous learning and training so that he can bring his best to serve
YOU!
Many who have met and spoken with Gary about his business philosophy and saw how he
worked, quickly realized that he is unlike ANY Real Estate Agent theyve ever met.
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Contact Information