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Buyer beware of location

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Posted: Monday, May 18, 2009 10:00 pm

Are you thinking about buying your first home? Perhaps you're considering buying a second home, retiring in a different area, or building your dream home. Even if you are purchasing in the same area, you must be vigilant during the purchase process.

In 2007, we decided to build a new home. I had specific requirements that I wanted: underground utilities; city sewer; and natural gas for heating. The subdivision where we purchased appeared to meet all those requirements. We received a list of utilities serving our MUD (municipal utility district). Because there were no visible propane tanks, I assumed that the area was on natural gas. When we were ready to move in, however, I was shocked to learn that our subdivision was on propane. It was piped in from a community storage tank. That meant that our heating bill would be two to three times higher than it would've been with natural gas.

With water shortages, mold, fires and floods in the news, you must take steps to make sure that the home you purchase is safe for you and your family. For example, stucco construction is in many other places in the country. Recently, many Texas builders have started building more stucco homes. When I mentioned the trend to a local Realtor, she responded by saying, "I would never buy a home with even a square inch of stucco on it!" The reason? Stucco construction cracks. If you live in an area where there is a high amount of rain and humidity, cracks can allow moisture into the walls. The result is mold.

Builders can minimize mold and improve energy efficiency by using high-quality insulation coupled with a moisture barrier product such as Tyvek. This stops moisture from seeping through stucco cracks and virtually eliminates mold problems. In our area, one builder used the cheaper alternative. Sadly, the people who bought those homes are now having moisture and mold problems.

In new subdivisions, erosion, drainage, and accessibility to septic, sewer and water are important concerns. For example, you may be looking at a beautiful, multistory home with the garages on the first floor and a number of steps up to the front door. The day is beautiful and sunny. What you may not realize is that the homes are on such high foundations because there is a history of storm surges from hurricanes. It's important to investigate whether the home you are purchasing is in a flood plain as well as the other types of risk associated with living in the area.

It's also important to determine whether you are on septic or sewer. A number of years ago, an agent sold a property on Mulholland Drive in Los Angeles. The city requires all properties to be tested to determine whether they are connected to the city sewer system. This property was not. They then searched for the septic tank. There wasn't one. The waste was actually emptying at a remote point at the bottom of the hill.

With severe drought conditions affecting many places in the country, another key issue is accessibility to water. Drought conditions are straining water resources throughout the Southwest, as well as places such as Georgia and Florida. Furthermore, if the area where you are purchasing is dependent on well water, it's important to examine the history of the aquifer (the natural formations that capture and replenish the water supply.) When the aquifer is not adequately recharged or is contaminated, the area loses its primary source of water.

What can you do to protect yourself? Check with local real estate professionals about the quality and the reputation of both the housing and the building in different areas. Search for complaints on the Web. If you're building a new home, ask neighbors how their experience was with the builder. How responsive is their customer service department? Do they respond immediately or does it take repeated calls to get a response?

Furthermore, whether you are buying a new home or a resale, have it inspected by a professional building inspector. If you're building, have the home inspected before they install the insulation and put up the drywall. Have it inspected again prior to closing. If you live in an area where there are earthquakes or landslides, it's also smart to also have a geological inspection in addition to your regular home inspection.

A final issue to investigate is the cost of insurance. For example, if you own a home in Jacksonville, Fla., your property taxes, home insurance and boat insurance (provided you can get it) could be triple what it is in the neighboring state of Georgia, in some cases. If you're purchasing a resale, ask the seller to obtain a copy of the property's insurance claim history through the Clue Database.

Careful research prior to closing is the best way to protect you and your most valuable investment.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of "Real Estate Dough: Your Recipe for Real Estate Success" and other books. You can reach her at Bernice@RealEstateCoach.com.

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