Quick question about a deal. Any help would be appreciated!

8 Replies

Hello everybody.  I am a newbie and currently looking at my first deal.  The one I am looking at is a three unit and it is a short sale.  Under the write up of the property it states "If property is vacant and no utilities are on (which I am guessing it may be but I will find out when I look at it), buyer is responsible for activation. Buyer to verify multiple unit zoning prior to submitting an offer."  My question is how do I go about finding out if the unit is properly zoned?  Should this be a concern for me?  Also not to sound stupid but what do I do to go about checking into the utilities and making sure they work before I make an offer?   Do I pay to have them turned on just to check before I even make an offer?  Any help or advice would be great appreciated!  Thank you so much!

You could check zoning with city and utilities with utilities companies. If something wrong - it may be good for your ability to make a lower offer. Take a contractor with you to estimate possible budget for rehab. Congrats on considering your first deal !
Originally posted by @Jane A. :
You could check zoning with city and utilities with utilities companies. If something wrong - it may be good for your ability to make a lower offer. Take a contractor with you to estimate possible budget for rehab. Congrats on considering your first deal !

 Thank you for the advice Jane. I'll start looking into it right away!  

First get it under contact at a price that works. Don't wast your time on due diligence until you have a hard contract. Your city or county will probably have a planning and zoning dept. usually you just go by and check. Chances are good it's fine as long as it was originally built as a multi unit and not converted without a permit. Most utility departments will do a temp 5 or 7 day turn on for inspection of a vacant for a nominal fee. Worth paying a couple of hundred on an inspection, if it comes back bad you can negotiate a lower price to account for repairs that we're not obvious.

you can also look into hiring a home inspector.

Originally posted by @Jeffrey Giffin :

Hello everybody.  I am a newbie and currently looking at my first deal.  The one I am looking at is a three unit and it is a short sale.  Under the write up of the property it states "If property is vacant and no utilities are on (which I am guessing it may be but I will find out when I look at it), buyer is responsible for activation. Buyer to verify multiple unit zoning prior to submitting an offer."  My question is how do I go about finding out if the unit is properly zoned?  Should this be a concern for me?  Also not to sound stupid but what do I do to go about checking into the utilities and making sure they work before I make an offer?   Do I pay to have them turned on just to check before I even make an offer?  Any help or advice would be great appreciated!  Thank you so much!

 A lot of this can potentially be done online or on the phone.

Utilities. Call the utility companies that serve the property and ask them if the services are active. If not ask if they were turned off by request, none payment, or for deficiencies in the utility services on the property. If by request ask if they offer a clean and show temporary service, you don't need to go into details as to why. If for none payment get the outstanding balance because it will likely need to be paid before services can be restored. If for deficiencies you will know you need to have a closer look at the utility service(s) during due diligence.

Zoning. Look up the current zoning. Then go to the city or county website the property is located and look up their use zoning codes. Most use zoning codes that are available online will tell you what types of uses are allowed in a certain zoning. If the zoning on the property is single family residence (typically R1) you'll then know the multiple units don't conform to the zoning uses allowable for that zone. If the zoning is R2, R3, R4 or a "C" commercial zoning then there will be a description of the allowable uses. One of these descriptions will be something like "multiple residential units of up to x number of units. If not available online then call the planning department and ask to "confirm" the zoning, and ask if the number of units is an allowable use for that property. 

Theres a fair chance the planning department won't take phone calls and you'll need to do this in person. 

Note: no matter what the zoning says on a property profile or in a listing brochure you will want to verify the zoning for the property by checking with the appropriate governmental agencies having jurisdiction over the use of the property. Many times cities and counties have zoning changes that change the allowable uses for properties in that zone. Many have provisions that grandfather in existing uses, but when the use changes, as it would in a new use for a vacant building, the grandfathering expires. Just make sure you verify the zoning that exists and make sure to mention the building units are vacant. Ask if this would initiate any new or old ordinances that would have an impact on a new occupancy of the units.

You would not want to have to go through the process of getting a conditional use permit, and having it denied after having closed on the property. Or if it did require a conditional use permit, or worse an upgrade to meet new building code e.g. parking requirements, IBC codes, etc., you can build in protections for such when you're negotiating your purchase.

Once you have it under contract be sure to check the utilities. I had to walk away from a deal last month because the electricity had been off for more than a year and the city would not reconnect without a full electrical panel upgrade and whole-house rewiring. The seller couldn't come down far enough to make the numbers work.

All great information!!  Thank you very much everybody for taking the time to help. I love this community!

hi jeff. you check with the local authorities on everything. first, go see the city treasurer. make sure the assessment shows that the house is worth what you will be paying. then, usually in the same building, talk with the code enforcement officer. they usually know about any issues with any house in their area. he or she can give you all the ugly details about the house and usually let you know when it was last occupied. next, go to the utility companies and ask when the power was last on, when was the gas last turned on, and when was the water last turned on. if it has not been a long time, chances are, things are ok. the only way you are gonna find a water leak is to have water flowing thru the pipes. same for electric. once it is turned on, any issues will show themselves. same with gas. turn it on and see what leaks and what doesn't. water has a main shut off valve, usually by the meter. if any leaks show up, just turn it off and fix the issues. gas has the same thing. usually right on the gas meter is a shut off. if anything leaks, turn the gas off and fix the leak. with electric, thats a different deal. usually the only way to shut off the electric completely is to pull the meter. but, if there are any electrical issues when you have it turned on, shut off the main breaker in that main service panel and fix the issues. its not as complicated as you would think. do your homework and you should be fine

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