3 Real Life Examples That Prove the HIGH Cost of Ignorance in Real Estate
I moved around a ton as a kid. To this day, I have never lived in a home for more than 5 years. I lived in three different houses in second grade! No, I wasn’t an Army brat; I was a corporate brat. I am not overly attached to any certain house, which probably makes it easier for me to live and flip than some.
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My dad knows everything — just ask him! Seriously, he knows a lot. About a lot of stuff. I don’t remember ever having a repairman at our house growing up — my dad just fixed it. And this was before YouTube showed you how to do everything. We had the same two cars growing up, the same washing machine my entire childhood, the same refrigerator. He fixed all the bikes in the neighborhood, he built the deck for the pool, and once a week he volunteered at the church to help construct our new building. He currently lives in a RV with my mom, and they travel around the US and build churches.
He works in whichever location needed, doing electrical, plumbing, tile, drywall and finish work. In short, he is handy and knows how to do it all, whatever it may be. So a guy like this would never have an issue with a house, right? Well…
That Time They Didn’t Get An Inspection
Let’s rewind to 1990. My senior year in high school, my dad loses his job. He finds a new one 500 miles away and moves there while we stay to finish up high school (thanks, dad!). He discovers things about the new place that make him continue his job search. He finally finds one 50 miles away from us, but in the meantime our house has sold. My mom is now scrambling to find a new house. Every house she looks at just doesn’t work, and they finally find a brand new build.
So now my dad, this same guy who has moved even more than I have, has personally bought and sold more houses than top real estate agents in major metro cities, forgoes the home inspection. It's a brand new house, what could be wrong with it?
It turns out a lot can be wrong, even in a house that has been inspected and approved by the local building inspector. Things like no attic access. At all. Things like no soffit venting. Those cracks that appeared in the fireplace mortar? Oh, turns out those aren’t from normal settling. Those are because the fireplace has no support under it. It is literally bricks sitting on the ground. Guess what happens when there isn’t proper grading outside? That’s right, basement flooding!
As a new investor, you might want to also forgo the home inspection. Three to five hundred dollars is just another expense you didn’t realize was involved in buying a home. That can seem like a lot of money, especially if you are buying in a lower price range.
Don’t skip the home inspection. Oh, wait. Let me rephrase that. DON’T SKIP THE HOME INSPECTION!
If you are a new investor, especially if this is one of your first 10 homes, get the inspection. Having moved around a lot, I have seen a LOT of houses. As an investor, I have been in still more houses, and as a real estate agent, I have been in even more. I can't begin to tell the stories of all that I have seen. I still get inspections because I want to know what I am walking into.
That Time They DID Get An Inspection
My husband and I put an offer on a townhouse close to a major city about a decade ago. It was recently remodeled and looked beautiful. It was much closer to both our jobs than where we had been living. Great everything. Our home inspection revealed not too much, but the inspector recommended that we have the exterior stucco inspected by a specialist to see if it was EIFS. What is that? Exterior Insulation Finish System, or fake stucco. EIFS was originally intended to be used in dry climates, but gradually branched out to wetter areas. The early EIFS didn’t have a drainage system in place, and the sealants around windows sometimes failed, allowing water to get in with no way to escape. A welcoming environment for mold.
A small amount of Googling in the midst of the EIFS mold era had us canceling our contract. If we hadn’t had the home inspection, we might have had an enormous problem on our hands. It just looked like stucco to our untrained eyes.
That Time a Friend Used the Wrong Stuff
A friend recently remodeled his bathroom. He spent a large amount of time at a big box home improvement store, talking to the guy who worked in the tile department about what he was doing, including tiling the shower floor. The tile guy recommended using pre-mixed mortar for everything, so my friend did. He finished up everything, took a couple of showers and noticed a squish squish. A Google search and a call to a friend who installs flooring revealed that you shouldn’t use premixed anything for a shower.
How do you know what questions to ask, if you don’t know what questions to ask? The BP Forums are an excellent place to start. Ask questions of posters who seem to have good answers. This online community is an unbelievable wealth of information, and almost every single person on this site wants to help you do it right. Very few questions go unanswered on the Forums. Use the search button at the upper right of the site to try and find information. Chances are good that your question has already been asked and answered several times, in varying ways.
You don’t know what you don’t know. But what you don’t know can cost you a lot of money. Do your research, ask questions, watch Youtube videos. And don’t forgo the home inspection!
Investors: Have you ever been burned by what you don’t know?
Leave a comment and let me know!