Tuesday, October 25, 2005

Q: I'm considering purchasing a house here and the agent told me that the current owners have done a complete remodel.

It looks really nice. What I'm worried about is that a friend of mine checked on the King County website and discovered that there were no permits for anything these people did. I also discovered that they just bought it less than a year ago for a third of what they are expecting me to pay. That sounds almost illegal. What can happen?

A: It isn't illegal to buy a "fixer", then do a quick remodel and sell it for a profit. That's been going on for a very long time and some people even do it for a living. They profit by purchasing less desirable houses and rehabilitate them. The fact that they often make a great deal of profit in a short time may feel like they're taking advantage of the future buyer, from an ethical point of view, but the fact is that they are following a very old American tradition to accumulating wealth.

Now as to the issue of permits, that can be a sticky situation. King County requires building permits for anything that changes the structure or systems of the house, or for additions to the house, even decks and porches. They also may require that the septic system be up-dated, repaired or replaced if the home is being enlarged. That could be pricey.

The County may, if they discover the situation or have a complaint, require retroactive permits. These are usually charged at twice the original fee plus penalties. Currently the County is charging less for these "already built" permits to encourage people to get them.

If you make an offer contingent on an inspection, which is the prudent thing to do, and you're able to verify the information your friend discovered, you might request that the seller obtain these retroactive permits so that you won't be liable for them later. You should also request a "Seller's Disclosure" form to see if they say that permits were obtained.

Wednesday, October 12, 2005

Q: I'm ready to call an attorney but I thought I'd ask you about this first.

I just bought a piece of land. It wasn't until after closing, when I went in for my building permit, that I found out the bad news. The private roadway that leads to the property is not where it's supposed to be! To get a building permit I have to bring it up to what they call "County Standards" which will cost about $20,000 and I have to move the road. Now the owners of the other homes on that road are upset because the new road will cut through what they thought was their land and the bids to do the work are all over $50,000! The seller didn't disclose this to me. I want to sue the seller.

A: The most important issue here is whether the seller knew about the road before selling to you. If so, and he failed to disclose it, you may have a case. That's for an attorney to find out. However, there is another issue that requires you to take some responsibility. In the standard purchase and sales agreement used for undeveloped land, there is a feasibility period for the buyer. If you go back and read the agreement you'll notice that among the things that the form recommends you do research on are: title issues, surveys, geotechnical studies, neighborhood review, potential county fees, cost of development, wetlands and sensitive areas, roads, utility charges and other items.

It is your responsiblity to do your own "due diligence" to find out the costs associated with development and to discover whether the property will fit your needs and your budget.

Unless you can prove that the seller knew that the road was not in its proper location and chose not to tell you about it, you may not have a case. From the reaction of the neighbors, I would guess that no one knew about the road. It's common here to find that roads were built without surveys and ended up in the easiest spot to develop.

Friday, October 07, 2005

Q: We want to retire on Vashon in three years and at the rate prices are going up we're worried that we'll be priced out of the market.

Is it crazy to buy now and rent the house out for three years?

A: No, not crazy at all. I've had many clients over the last few years do exactly that. Most of these folks have watched the value of their property go up significantly and express gratitude that they bought sooner than later. It's very possible that our prices will continue to climb. We hope for some cooling in the market but even if we go back to what is considered "normal" for us on Vashon Island we are still looking at an increase of about 10% per year.

As you begin looking for a home to buy, be sure that you look ahead at needs you may have in the future. As cute as two story cottages and farmhouses are, those stairs can be a problem as you grow older. Be sure there is at least one bedroom and bathroom on the main floor of the home and that there are just a few stairs to get to that main floor.

It's also important that you think about location in relation to your future life. Being off in the woods and isolated can be wonderful but as we age most of us begin to see the value of having neighbors nearby and being a little bit closer to town and local services.

You should also have an understanding of the rental market here so that you know how easy or difficult it might be to rent out the home you select. Renters are rarely looking at the same issues as buyers. They focus on things like the cost to heat the house or on the closeness to schools, rather than the view or style of the house. You also want a home that's in good shape so that there won't be endless amounts of repair and maintenance to worry about during the time you are renting it out.