Do An Initial Walk Through: What Lenders Don’t Tell You

You have identified a property that you are interested in purchasing. You and your realtor have connected and the house is something that meets your home buying parameters; nice location, proximity to work and to local schools, square footage etc.

But how do you know the house you’re looking at is free of potential concerns or worse hazards? Your real estate agent is required by law to eyeball the property and point out obvious concerns to you about the general visual integrity of the property. Depending on your real estate agent’s experience they might be able to offer you advice about particulars regarding the home.

Here’s a checklist of the items to watch out for during an initial walk-through that most lenders will not tell you about.

-Missing handrails
-cracked or damaged exit windows or window glass
-defective paint surfaces in homes constructed post-1978
-minor plumbing leaks
-defective floor finish or covering
-damaged plaster, sheet rock or other wall and ceiling materials in homes constructed post-1978
-poor workmanship
-lack of an all weather driveway

These items can be especially important if you’re looking at a foreclosure property or a short sale transaction. If you are securing mortgage loan financing in order to buy your house, these items will not need to be corrected before closing escrow.

Following is items that must be fixed before closing escrow. Usually these items can be pinpointed in your initial walk-through.

-inadequate access/egress from bedrooms to exterior of home
-leaking or worn-out roofs
-evidence of structural problems
-defective paint surfaces in homes constructed pre-1978
-defective exterior paint surfaces in homes constructed post-1978 where the finish is otherwise unprotected

*Note: Make sure the house you are buying has a central heat source that is operational. Also if the kitchen has no appliances, these will need to be installed before closing escrow. Speak with your real estate agent.

As you complete your walk-through take notice of the following:

1. Is there water damage on the ceilings or spotting on the walls? If yes, the water damage will need to be repaired before closing escrow. The home will need to be appraised and the appraiser will likely note these items.

2. Look for a breaker or for a fuse box. If there is any open or exposed wiring on the interior or exterior of the home, these items will need to be corrected before closing escrow.

3. Does the home have a carbon monoxide detector? The law took effect July 1, 2011 the all homes must contain a carbon monoxide detector. A new one usually costs about $15 at your local Home Depot.

4. Find the water heater. The water heater must be vented so air can pass through and it must be strapped for health and safety reasons. It also cannot be leaking water in any form.

5. Next visit each bathroom of the property. Other any signs of water damaged or dry rot? How about the window sills? Window sills are another common area of dry rot. Any dry rot found on the property, that is visible will need to be corrected before closing escrow.

6. Ask your real estate agent about a termite report. Find out from your agent if the seller has already paid for one. In many cases the seller of the property pays for the pest report although this can vary from market to market. Find out from your agent if there’s any possibility of termite damage. This will need to be cured prior to closing escrow.

7. Ask your real estate agent about non-permitted work done on the property. Ask your mortgage lender if any non-permitted work is going to be an issue with mortgage financing? It depends on the scope of what additional work was done on the property without permits.

8.Take notice of the flooring throughout the home. Is the flooring beaten up? Does it appear as though the flooring will need to be replaced? This is something that the appraiser will likely look for when the appraisal is ordered.

9. Head out to the backyard. Is there a pool? Ask your real estate agent if the pumps of the pool are operational? If the pumps of the pool are nonoperational, you’ll more than likely need to have a fax constructed around the pool because this is a potential health and safety concern to your mortgage lender.

10. Here’s the obvious one. If there is anything about the property that looks a little odd talk to both your mortgage lender and your real estate agent. Sometimes these items can be taken care of by the seller.

Go on the initial walk-through with an open mind because many of the items listed here can be fixed with relatively low costs. Ask your real estate agent to negotiate for these items to be fixed.

Use this checklist when doing your initial walk-through and discover why lenders don’t tell you about these items.