The residential real estate market has changed greatly in the last few years. Everywhere you look, you can read about the serious downturn in the valuation of homes and the recent issues affecting the mortgage banking system. In addition, currently there is a significant increase in the inventory of homes listed for sale. Some sales are due to people upgrading or downgrading their homes because of changes in the family’s needs and some are due to incidental migration. However, some sales are also due to the more serious issue of economic hardship, which can lead to the possibility of foreclosure unless people are rescued by selling their homes.
This market condition gives buyers the fortunate opportunity to pick and choose from the available inventory listed for sale. Such a condition is creating what is known as a buyer’s market. As a buyer in a buyer’s market you may have the opportunity to find a good deal in the geographic area where you are looking to purchase a home. It may also be an opportunity for first-time home buyers to buy a home, as the properties have become more affordable. Under these market conditions, there may be a temptation on the part of buyers to jump into a purchase at a perceived bargain price, without fully examining all the risk factors.
Once you have found your home and sorted out the financial aspects of the purchase, you must focus on the physical condition of the home. We have all heard the Latin term caveat emptor, “let the buyer beware.” This applies to house purchases more than anything. While you may be fortunate to be able to time your purchase in these market conditions, be careful not to be enticed and overwhelmed by what seems to be a very good deal. Most people make the mistake of falling in love with the house they are about to buy, before the house is actually theirs. I always counsel my clients to stay objective, don’t overlook major flaws of the house, and do not fall in love with the home they are about to buy, until the actual closing. In today’s news we frequently hear about environmental issues, and their impact on the world at large, and on us as individuals. The same applies when you are about to purchase a home. A physical home inspection today is a must and should not be omitted due to cost savings. If you cannot afford property inspection by a professional, then you are not ready to buy a home. There are different customs and procedures in each state as to when such a physical inspection should take place. Inspection generally occurs either before the contract is signed, or after the contract is signed. Typically in New Jersey, the inspection is done after the contract is signed and in New York is takes place before.
The main focus of the physical inspection must be a review of the structure of the house. There must be a search for any wood-boring insect infestation, such as termite or carpenter ants; asbestos and radon testing and inspection of in-ground oil-storage tanks, also known as the UST. The most difficult of the above points of the inspection is dealing with oil tanks, as you cannot quantify in advance the cost of remediation if same is needed. Oil tanks are sometimes still actively servicing the current home, but more frequently they are not in use. The current owner, the seller, may not even know about the existence of the underground tank. This is especially true if the seller is a bank or an estate. Most home inspectors do not have the ability to find these underground oil tanks, and this necessitates the retention of a separate company (and additional expense) to scan the premises for the existence of a tank. In some cases properties have more than one tank buried underground and the seller had no knowledge of them being there.
Frequently, a seller may be willing to sign a certification stating that to the best of their knowledge the premises does not contain any underground oil tanks. In doing so, the seller truly does not violate his certification but, unless you check the premises, you will be the one with the headache of an oil tank. A post-closing discovery of such a tank can be very expensive, especially if there was a past oil leak, or even worse, a current leakage of oil. Oil leaks can also migrate to an adjacent lot. Once you own a property with these issues, you have bought more than you bargained for. Therefore, always insist on a special inspection of the property you are about to purchase. In addition, you should have an extensive oil tank scan to verify that there are no underground oil tanks on the premises. Money spent now on such an oil-tank inspection will be your money well spent and the cheapest insurance you have ever bought. In my many years of practice, I have seen many serious problems arise out of improperly counseled purchasers, or those not understanding the importance of the environmental issues that can arise in a simple house purchase. I always inform my clients that if you are about to buy a new home, and likely making your largest financial investment, do not skip the oil-tank inspection. The tank inspection and all other physical inspections should not be neglected due to a perceived great deal on a home purchase. Proceed with caution and care, even during a buyer’s market.
Happy house hunting!
By Jan Meyer, Esq.
Jan Meyer is the founding member of the Law Offices of Jan Meyer and Associates, PC. His firm currently employs eight attorneys and is a full-service firm handling legal matters including commercial and residential real estate, corporate law, catastrophic personal injury lawsuits and many other areas of simple and complex litigation. www.janmeyerlaw.com. They have offices in both Teaneck, New Jersey and New York City. Phone: 201-862-9500/212-719-9770.
