Problems that can impact a home purchase

Whether you are a first-time home buyer or downsizing for your retirement home, the same emotions can apply to buying a home. With more experienced home owners, they might be more experienced when it comes common household issues, but that doesn’t mean they can’t also put on blinders when they think they’ve found the perfect home. It’s why your home inspection is so crucial. In this blog post, we talked with some experts to get their feedback on some of the most common issues that pop up during the inspection process. As we discuss at length, some very big decisions need to be made throughout the home buying process, and these inspection issues are some of the biggest hurdles you might face.

 

Common problems that pop up

 

We’ve seen our fair share of transactions throughout the years, and you pick up on common themes. While there are sometimes outliers that affect a home purchase, you can probably be certain if your inspection report pops up significant issues, it will be one of these:

 

Electrical wiring

knob-and-tube-wiringDepending on the age of your home, you may have out-dated wiring that is unsafe and has the potential to cause a devastating fire. Knob and tube wiring was the standard way of outfitting homes with electricity from the 1900’s through the 1950’s. Unfortunately, this system is considered unsafe for modern homes as it isn’t capable of carrying the loads that modern living put on homes. While breaker boxes are designed to shut off electricity in the case a circuit is overloaded, knob and tube wiring also means that it’s just plain old and like anything that has been relied upon for 70+ years, decay will occur. If you want to buy a home and the inspector says it has knob and tube, you need to consider having the entire house re-wired. And hold your breath…it’s expensive! Like possibly $10,000 or more!

 

Sewer line

sewer-scope-cameraWe wanted to make sure to include this system even though it isn’t something that your inspector will take a look at. In fact, you need to hire a sewer line company to come out and scope the line with a camera to fully diagnose its condition. This is an absolute must. It will cost you a couple of hundred dollars, but especially with older homes it could end up saving you a ton. Having a sewer line replaced can cost upwards of $6,000 or more, and the last thing you want is to have a huge surprise like that pop up shortly after buying your home!

 

Water Damage

water-damage-problemsIn any sellers disclosure statement, there will be a section regarding water damage. But the reality is that isn’t going to give you full picture of any issues regarding the home, and that can especially be true when it comes to any water damage problems. While a home inspector is capable of finding potential moisture issues, the reality is if problems are discovered, you’ll want to hire a Houston water damage restoration company to further assess the situation. They’re equipped with moisture detectors that can peer behind walls and under subfloor and give you a much clearer picture of any potential problems. Water damage can be an incredibly expensive problem to fix, especially if it has been an ongoing problem over the course of many years. In Houston, the most common problem we see if foundation issues from water.

What oil prices are doing to the real estate market

It’s no secret that much of the Houston economy is dependent on the energy industry. Over 5,000 O&G operations call Houston home, with 17 energy-related Fortune 500 energy companies choosing to headquarter their US operations in the Houston-Sugar Land-Baytown metro area. Some 30% of our jobs are within the oil and gas energy, so when oil goes bust, so too does our local economy. While some efforts are being made to trumpet our economy’s resilience to oil prices, make no mistake: when oil is up, our economy is good but when oil goes down, so too does our economy.

 

What impact is oil having on our economy?

 

Employment data is fun because you can twist and turn it to fit whatever agenda you have. For the Chamber, as a pro-business alliance the goal is obviously to try and create a positive outlook, if not for the present at least for the future. But if you look behind the facade, the reality is that the our local economy has at best come to a grinding halt and at worst is in severe contraction.

pay-roll-jobs-houston

Some economists have used a recent figure that 64,000 jobs have been gained over the course of the last 12 months. That sounds great, but it doesn’t give an accurate interpretation of the present economic situation unfolding in Houston. Why? Because much of 2014 was an excellent year for the energy sector. Oil’s plunge occurred mid year with much of the sell-off occurring after OPEC’s Thanksgiving time decision to continue pumping oil. So if you bucket the job growth, it’s not difficult to see we had a major increase followed by a complete collapse (once the industry was able to absorb lower prices, slash spending, etc.).

 

How is that impacting the real estate market?

 

Once again, it depends who you ask. Have you ever asked a realtor their thoughts on the market? “It’s a great time to buy (or sell, depending on your situation)!” Well, that should give you a glimpse into some of the commentary coming from players within our local real estate market. At first (a few months after oil’s crash), many stated that the real estate market’s resilience was proof the economy had diversified beyond oil and that this crash would be different. They even made some fancy charts to show how things have changed!

Houston-housing-market-vs-crude-oil-price-600x450

But as with the actual economy, real estate values are a lagging indicator of the actual health of our area. Fast forward a few months, once the market has had a chance to digest the plunge in energy sector related activity, and the Houston Chronicle is singing a different tune. And the fact is, the data is pretty stark. New home sales are down 11% and closings down 13% from the same period last year. And some predict we’re just now beginning to feel the effects of oil prices and that there is still plenty of room to fall.