Buying from liquidator, possibly pitfalls?

dahamsta

What kind of pitfalls are possible when buying a house from the liquidator of a development company? The houses are essentially complete, and the estate agent says they're structually covered by Homebond. What else do I need to worry about?

Paulw

dahamsta wrote: »

What kind of pitfalls are possible when buying a house from the liquidator of a development company? The houses are essentially complete, and the estate agent says they're structually covered by Homebond. What else do I need to worry about?

Finishings of the unit, who will address future faults (within 1-2 years of building), is there a management company and the state of the management company, has the local planning authority signed off on the development.

There are always a number of aspects to consider.

silverharp

when everyone else bought? could the estate remain less then 100% occupied, too many rentals etc.

dahamsta

Paulw wrote: »

Finishings of the unit

As I mentioned, it's essentially complete. I accept that I'll need to hande carpeting and a few changes myself.

who will address future faults (within 1-2 years of building)

I accept that I'll need to handle snags myself. What faults should I be concerned about specifically?

is there a management company and the state of the management company

There won't be a management company, the community will need to form one.

has the local planning authority signed off on the development.

I don't understand this point, if you mean planning then yes, of course. How else would they need to sign off on it?

There are always a number of aspects to consider.

Other aspects? What, exactly?

silverharp wrote: »

when everyone else bought? could the estate remain less then 100% occupied, too many rentals etc.

The estate agent maintains that all other units in this part of the development are sold, but some remain empty. I'd say occupancy in this section of the estate is about 50%. I'd guess, totally off the top of my head if I'm honest, that the rest will be occupied before I sell in 3-5 years.

Thanks,
adam

Borderfox

If the local authority take control of the estate then the street lights/road maintenance/grass cutting and bin collection is looked after by them, if not then these need to be paid by the management company

antoinolachtnai

The most important thing is the title. Who is the landlord (company or person owning the freehold)?

Presumably there is a guarantee on the structure from homebond (if there's not the bank won't lend against it.)

Talk to your solicitor.

dahamsta

antoinolachtnai wrote: »

The most important thing is the title. Who is the landlord (company or person owning the freehold)?

You'll have to explain this in more detail. The company is bust, the house is being sold by a liquidator. What's the default in housing estates, does the land still generally belong to the developer? I would have thought freehold was the default.

Presumably there is a guarantee on the structure from homebond (if there's not the bank won't lend against it.)

As stated in my post, the structure is covered by HomeBond.

Talk to your solicitor.

About what? Obviously we'll be talking to a solicitor when I progress further, but I was given the same advice on AAM, and it's yet to be explained to me what needs to be discussed with them.

Jo King

The title you get from the liquidator is the same you would have got from the development company. The liquidator has all the powers of the board of directors and acts in the name of the company.
The big issue I am concerned about is the snag list and dealing with the snags. Usually a developer will do a snag list and will keep men on site for a time after the handover to deal with the snags.
Homebond will only cover structural issues and will not be concerned with the myriad of small snags which arise in any new house.
Loose fittings on pipes causing leaks, Doors not fitting properly, missing screwa and nuts on built in furniture etc.
I assume you are being asked to but "as is" and the liquidator will not do a snag list or send men back after the handover to deal with any issues arising.
A very thorough and careful survey should be done in such a case. Even simple electrical or plumbing faults will cost a lot if a tradesman has to be called in to investigate and rectify.

dahamsta

Thanks for the detailed and contructive reply Jo King, appreciate it.

I haven't been told I'd be buying as-is, but I'd be very surprised if that wasn't the case and I'm working on that assumption. An amount equal to the deposit has been set aside for snags, and a smaller amount for issues that could crop up later. If mortgage approval is granted, the first step would be to walk the house(s) with a camera and document everything that needs doing. I'd like to get a professional to do the same before committing, but I'm assuming a professional survey will focus on low-level items like structure?

The houses were among the first built, quite some time ago (overpriced), so it strikes me that some items in particular, like dodgy pipes or leaks, would be readily apparent when walking the house. What less obvious things should I look for?

Again thanks,
adam

Victor

Buying now to sell on in 3-5 years. Doesn't that sound familiar?

dahamsta wrote: »

The houses were among the first built, quite some time ago (overpriced), so it strikes me that some items in particular, like dodgy pipes or leaks, would be readily apparent when walking the house.

No. There water and electricity are probably turned off until you moved in (the last thing a developer wants is for vandals to turn on all the taps and block the drains).

What less obvious things should I look for?

Everything. What is the windows are dodgy and Homebond say "not structural"? Will there be any comeback with the window manufacturer (who may not have been paid).

dahamsta

Hi Victor,

Victor wrote: »

Buying now to sell on in 3-5 years. Doesn't that sound familiar?

I missed the investment boat 15 years ago, the old fella offered to loan me the deposit on an apartment and I said "nah, I'll be grand". Renting ever since, waiting for the boom to end, no rush. I think we may have arrived.

I just want to get myself on the ladder, keep my head down, and move to my target further into the sticks in 3-5 years. I accept it would be a risk, albeit one I won't jump into blind; which is why I'm here. Ultimately though, I have a long-term housing plan and estate living ain't in it. Where would the wife put the chickens?!

No. There water and electricity are probably turned off until you moved in (the last thing a developer wants is for vandals to turn on all the taps and block the drains).

I was talking more about external leaks, but I take your point. Obviously I'll flick all the switches and turn on all the taps before while I'm doing my snag list, and I'll bid based on what happens, but of course there's the possibility of trouble down the line. It's budgeted for to a certain extent. I couldn't budget for every eventuality though, and I don't think many could. Risk is about weight when you get right down to it.

Everything. What is the windows are dodgy and Homebond say "not structural"? Will there be any comeback with the window manufacturer (who may not have been paid).

I'd actually assumed windows wouldn't be covered under Homebond, must read the fine print on their website before I go any further. (I didn't think the stairs would be covered tbh. We also have a pellet burner, solar panels and a heat exchanger to worrry about!) Plus of course manufacturers will try to lob it back at the builders - "oh, they broke that when they put it in, not my fault" - but of course you'll get that with any house. More of a risk here though of course, I totally accept that.

Keep it coming, please, this is all really helpful!

adam

the_syco

dahamsta wrote: »

I just want to get myself on the ladder, keep my head down, and move to my target further into the sticks in 3-5 years. I accept it would be a risk, albeit one I won't jump into blind; which is why I'm here. Ultimately though, I have a long-term housing plan and estate living ain't in it. Where would the wife put the chickens?!

I'm unsure how sarcastic you're been, as there is no ladder any more. For a ladder to exist, there has to be people looking to buy your house in the future for more than you bought it for now. Do you really expect people to buy your house for more than it's worth now in 3 years time?

dahamsta wrote: »

Obviously I'll flick all the switches and turn on all the taps before while I'm doing my snag list, and I'll bid based on what happens, but of course there's the possibility of trouble down the line.

Eh, no. You get a snagger in, who knows what to look for. For example, you could run the water through the radiators, but unless you knew where to look for common faults, you may not notice the puddle building up until the roof caves in 9 months down the line.

dahamsta wrote: »

I couldn't budget for every eventuality though, and I don't think many could. Risk is about weight when you get right down to it.

No. Risk is stupid. Get a snagger in to look at the house.

Borderfox

I had an engineer look at a house I was going to buy in Coolock (brand new) and his report stated that there was no foil backed plasterboard on the inside of the roof (attic converted) and that this would lead to the roof rotting from the inside out. I certainly wouldnt have seen this.

dahamsta

the_syco wrote: »

I'm unsure how sarcastic you're been, as there is no ladder any more. For a ladder to exist, there has to be people looking to buy your house in the future for more than you bought it for now. Do you really expect people to buy your house for more than it's worth now in 3 years time?

I didn't say I was looking to make a profit and the paragraph you didn't quote makes that pretty clear, so I have no idea why you'd assume that. Call it "the chain" instead of "the ladder" if it makes you more comfortable.

You get a snagger in

Every intention. Not sure what detail a snagger goes into though, I've assumed I'll need both a snagger and a proper engineer.

No. Risk is stupid.

That's your opinion. My opinion is that non-enumerated risk is stupid. No risk is boring.

Finally, this is new to me and I'm learning, sniping doesn't help. If you can't talk to me without condescension, please don't talk to me.

adam

Borderfox

An engineer can do a snag list for you, I got a guy from Malahide to do the inspection and he charged me less for a verbal inspection eg he told me to run away from the house very quickly. Try and get a guy who knows plenty about pyrites too

dahamsta

Be handy if they could do the valuation too!

dahamsta

To come back to this, let's assume that I've had my surveyor and snagger in and accepted / dealt with any faults they've highlighted. Now we're back to the builder's warranty for things like wonky stairs, warped doors, dodgy plaster, etc, etc. I'm assuming standard house insurance won't cover me for things like this, so is there an insurance product that can replacement a builder's warranty, or do I just have to budget for it?

Thanks,
adam

antoinolachtnai

Homebond is the builder's insurance/quality assurance that is supposed to cover big stuff. Does it have homebond?

For small stuff less than a few thousand euros to fix? Don't think anybody's going to insure you on that. There is just too much uncertainty for an insurer.

dahamsta

That's the second time you asked Antoin, do you not read the posts you're replying to? Yes, it's covered by Homebond, but they're very strict about terms by all accounts, very slow to move, and it's been suggested that it might not be valid if the builder has gone bust (which didn't make a lot of sense to me, isn't the bond... well, the bond?)

That's what I thought about the smaller stuff, and that's why I budgeted for it, but I assumed when people got their knickers in a knot they might know of someone that'll insure against it.

adam

antoinolachtnai

You are right, I missed it twice. But homebond actually provides insurance. As I understand it, this means that they pay out even if the builder goes wallop. They are backed by a big insurer. (This is to protect the bank as much as to protect you.)

http://www.homebond.ie/ has some more details.

dahamsta

That's what I thought. We need to confirm Homebond is actually in place first though, and that it transfers to us if we buy the house. This is with the solicitor. Still only structural though.

TBH I always just assumed that non-structural issues would be my problem to sort out, people here just seemed to think that's an unacceptable risk. Plenty of bargains to be had from liquidators though, another bust of houses in our area just droppped by 50k, I'd guess for the same reason.

adam

antoinolachtnai

I think it is a little more subtle than that. It *may* cover things which aren't necessarily structural, but are still pretty major.

The homebond website says 'structural and relevant'.

There is no real certainty about what this means. I wonder what the actual homebond policy says?

dahamsta

I'm just going by the comments I've found about it in a quick search, I'd need to research it in more details before I sign anything. Feedback is generally very negative though: very tight definitions of "structural" and very, very slow to pay out. Sounds like a Quinn Direct policy.

the_syco

dahamsta wrote: »

I didn't say I was looking to make a profit and the paragraph you didn't quote makes that pretty clear, so I have no idea why you'd assume that. Call it "the chain" instead of "the ladder" if it makes you more comfortable.

What paragraph would that be? You only "get your foot on the ladder" to make a profit.

dahamsta wrote: »

Every intention. Not sure what detail a snagger goes into though, I've assumed I'll need both a snagger and a proper engineer.

Yes and no. From what I've seen here, a snagger is sometimes only a snagger (ie: builder), but an engineer can also be a snagger as well.

dahamsta wrote: »

That's your opinion. My opinion is that non-enumerated risk is stupid. No risk is boring.[p/quote]
What I meant was that the risk of something being f**king up (if the builder knew that they were running short on funds, they may have taken some shortcuts), and leaving you with a house that needed an extra €30-€50,000 of work put into it is stupid. Getting it snagged beforehand, finding out about this pitfall would allow you to make a more informed decision. Most of the time the snags tend to be small, but most of the time you're not buying liqutated homes

dahamsta wrote: »

Finally, this is new to me and I'm learning, sniping doesn't help.

Hmmmmm.... didn't mean to snipe.

dahamsta

the_syco wrote: »

What paragraph would that be?

The paragraph before the one you quoted.

You only "get your foot on the ladder" to make a profit.

Again, call it "the chain" instead of "the ladder" if it makes you more comfortable.

Yes and no. From what I've seen here, a snagger is sometimes only a snagger (ie: builder), but an engineer can also be a snagger as well.

True. I guess there's a risk of the surveyor not going into as much detail as a dedicated snagger, but then with snaggers you have the risk of the chancers and muppets out there. I think we're going to do a run through ourselves first, and then bring in a snagger that comes recommended. It'll be interesting to see the correlation between the two results.

What I meant was that the risk of something being f**king up (if the builder knew that they were running short on funds, they may have taken some shortcuts)

Not an issue here, the houses are essentially complete and have been for some time. They were in the first phase, just didn't sell cos the builder put an unrealistic price on them. There's still a risk though, in that they've sat unoccupied for all that time.

and leaving you with a house that needed an extra €30-€50,000 of work put into it is stupid.

It's only stupid if the person is stupid enough not to enumerate that risk. We've budgeted for a certain amount of work on top of the things that are obvious. We haven't budgeted 30-50k, but that's risk for you.

adam

the_syco

dahamsta wrote: »

Not an issue here, the houses are essentially complete and have been for some time. They were in the first phase, just didn't sell cos the builder put an unrealistic price on them. There's still a risk though, in that they've sat unoccupied for all that time.

If the house is not being lived in, the water will be off. When switched on, is when damp spots, loose fitting, etc, may appear.

If there's an oil tank in the back garden, ensure that the pipe is above ground. I've lived with properties with both, and when the pipe from the oil tank is above ground, you'll see when it leaks (generally they will crack or burst at extreme temps). The house where it was below ground, we just assumed it was cracked, as we went through £300 of oil in a month (heating wasn't on that much).

dahamsta wrote: »

True. I guess there's a risk of the surveyor not going into as much detail as a dedicated snagger, but then with snaggers you have the risk of the chancers and muppets out there.

Agreed.

dahamsta wrote: »

I think we're going to do a run through ourselves first, and then bring in a snagger that comes recommended. It'll be interesting to see the correlation between the two results.

Cool. You probably already have a snag list, but if not...

Judes wrote: »

Why not go in with a friend some day - and take it room by room - armed with notebooks - do a checklist and start with some of the following, I hope I don't sound too obvious:-

Wall sockets correctly fitted and working.
Skirting board, you wouldn't believe how often this isn't finished.
Door saddles - see if you can walk between rooms barefoot, without hurting your feet - I know that sounds funny but again, some builders don't finish these off very well and it can cause a problem later.
Ensure all doors can open/close easily. Make sure door handles have been correctly fitted and that keys fit and turn in the key hole.
Look out for cracks in plastering, if the building has gone up quickly, they will appear fairly soon.
Check out fittings for lights etc. i.e. wiring completed so watch out for wires that seem to be going nowhere/tied up.
Watch out for ""slopes" - I've seen shower accessories/tiles fitted so crooked that the person originally fitting must have been drunk whilst doing it. Sloping finishes can cause later problems if trying to add your own accessories i.e. shower doors/cabinets/shelving.
Ensure if you have fitted kitchen/wardrobes etc. that all doors/drawers open and close easily.
Check windows on a rainy day.
Stand outside and check guttering and shores again when raining.
If carpet fitted or floor tiles ensure that it goes to the wall/skirting board, run your finger along to see that it fits correctly.
If you have floor boards, then look around radiator areas - i.e. make sure that they've allowed enough space around the radiator pipes as floorboards do expand a bit as they settle and if the hole isn't big enough they can press the radiator pipes which can cause problems later - or on the other hand the holes cut out of the floor boards could be too big and you are left with something like the Gap of Dunloe. If floorboards are fitted very tightly to skirting board with no expansion space, this could again cause floorboards to rise later.
Don't forget to run showers/taps/flush toilets a few times - to check water pressure and that nothing is blocked anywhere (once had a toilet flood in a brand new office block - day one - on investigation there were lumps of cement and a pair of boxer shorts - blocking the pipe).
And if you have a chimney, put your hand up and feel around for blockages. If you have a garden make sure the builders have cleared all their rubbish/materials etc. and not used it as a dumping ground.

Hells_Belle wrote: »

Just as an FYI because I don't know which of these items would be on a snagger's list... when we moved into a new build, nearly all our problems were around plumbing/heating/appliances.

If your house comes with appliances, run each and every one. Our washer was improperly plumbed in and the first laundry load flooded our kitchen and new living room carpets. Our dishwasher was missing some part and couldn't release the dishwasher tablet. Several of our electric wall heaters were missing fuses and didn't work. Our super-efficient new wave boiler was so new wave, it took them 4 days to find an engineer actually qualified to repair the non-functioning timer (and thus, non-functioning heater, and non-functioning hot water).

I spent more time the first two weeks in the builder's on-site office than in the house. Getting everything sorted out was pretty much a full time job.

From: http://www.askaboutmoney.com/showpost.php?p=45795&postcount=8

Walls - level?
floors - level?
Skirting Boards
Water (any Leaks?)
Ceiling
Extras? - Lights/Plugs?
Glass Scratch?
Fittings (straight & secure)
Power?
Socket?
Locks Handles?
Insulation
Door Frames
Saddle Board
Floorboards (clean? Creak?)
Fireplace
Doors (kitchen units) (rattle)
Sinks & Toilets flush & fill up
No extra rubbish around
Plastering
Tiles (Roof and Front)
Gutters (and Shores)
Extras Ordered
Drains Shores & Gutters
Ventilation - 1 in each room
Walls around property
Keys for all locks
Manuals for anything - Gas?
Front & Back Door condition
Extractor Fan
Anything lose?
Gaps around doors?
Window Sills & Handles
Driveway
Wardrobes
Radiators
Tiling
Fireplace & Chimney
Taps?
Bathroom Fittings secure

Have fun