If you are buying for restoration and resale, unless you are very confident of your own abilities and judgment you may well feel you need guidance from a builder on costs and from a selling agent on your eventual realisation figure.
I would hope that you already have both in tow on the basis that they have an opportunity to profit from your endeavours as well as you. You might already have decided to cut your builder in for part of the profit, although this should not stop you from ensuring that he is fully aware of how his costs are quantified and how the profit, or dare I say, any loss, is to be split. With a common sense approach you should be able to get a pretty good idea yourself of what needs doing to a property or, alternatively, be capable enough to decide whether you need the advice of a building surveyor or structural engineer. Let me run through many of the items to look for.
The first look. Always start by a slow, and I mean slow, general look round inside and out to get your bearings and familiarise yourself with the property. If you can, choose a time when it’s raining (and if it isn’t the first time, go back when it is). There’s nothing like a cold wet shower down your collar to draw attention to faulty rainwater goods!
Now start to use your common sense and start looking about you more carefully.
1. Structural failures. No one needs to be a surveyor to judge a wall is out of true or a window frame is crooked. Who straightens all the pictures in you house after the dusting? Look for noticeable cracks at the corners of door and window frames, the line of mortar in brickwork being crooked or bent and for settlement over window and door arches. Look for ceiling cornices that have cracked and crooked door lintels inside. If you must be like an old-fashioned surveyor, carry a marble in you pocket to check how sloping is the floor that your sensitive feet have already detected – or if you must, take a spirit level, just in case! Be particularly suspicious of cracks in walls that run beneath the damp proof course level. For good measure it is worthwhile giving a cursory look at other houses nearby to see whether they are suffering settlement. If they do, go back and check for incipient cracks in the same places in the structure of the one for which you are thinking of bidding. Only now is the time, if you are suspicious, to start talking to a surveyor or engineer.
2. Damp. Damp should be obvious. Smell it or feel the humidity; look for old and new damp stains; run your hands over the lower half of the ground floor walls or indulge yourself in a damp meter, if you are feeling adventurous. Then trace back the reasons for any damp you find. Leaking roof or gutters? Faulty downspouts or overflows? An old and faulty damp proof course? Faulty plumbing? They are all curable, at a cost. Then go out and find out that cost.
3. Wood. Faults. Look carefully for the flight holes and you will know you have found woodworm. Make sure you lift the carpets and the linoleum and that you look in dark small corners, under stairs and in roof spaces. If there is fresh dust and clean holes then specialist treatment is necessary. Once you find it somewhere, suspect it elsewhere. Any self-respecting woodworm turns into a little fly in it’s third year and goes prospecting! That’s when it has bored its way out through the clean hole you have found. Woodworm is treatable. Wet rot is mere deterioration in timber which has been subjected to damp and is treatable – just look for the crinkled rotted looking timbers and replace them after you have cured the cause of the damp which caused it in the first place. Dry rot is vicious. Smell, if you are lucky, as you walk into the property – like a cross between wet seaweed and a clutch of vile fungus up close. And that’s what it is. A fungus that can grow large coloured fungoid mushroom-like growths. It starts with an airborne seed that fruitfully falls on damp wood in stagnant surroundings. It then grows long thin white tendril roots that go seeking dry fresh timber for further sustenance. I have seen the roots grow through an 18in thick brick wall and fill a dry cellar beyond with a thick cotton wool type mesh in 6 months. The roots will spread everywhere. You will really need a good and thorough specialist to poison and eradicate this menace and cure the conditions that fostered it’s growth in the first place. Make sure you get a contractor who gives you a guarantee that is worth much more that the paper it’s written on! Dry rot is not for treatment by amateurs and your future buyer or mortgagee will certainly need to have the guarantee. Furthermore, that guarantee is very likely only to cover the new timber that has been installed! It will not cover you or your buyer or the mortgagor against future attack of the timbers that have not been replaced.
4. The Cosmetics. This perhaps is not an item which can be covered too lightly, but it should be immediately obvious to you if the bathroom and kitchen fittings need replacing. How are the plumbing and electric installations? How’s the decorating, inside and out? Don’t skimp on any of these and don’t use paint and wallpaper just to cover up any faults.
5. The Exterior. Too often I feel people don’t think about gardens, paths and boundaries. What was that about first impressions? In housing they always count. Think of your first thoughts as you began the first inspection.
So now I’ve frightened the life out of you! If I have, maybe you should think about getting a surveyor in anyway!
There are really three approaches:
1. You can call in a builder you feel you can trust. This has the advantage that you have the practical approach and a chance of a realistically quick approximate costing. On the other hand you probably have lost any chance of pecuniary recourse if he misadvised you.
2. You can get a full building survey. If you do this you should ask the surveyor to give you a full and detailed structural survey. He or she will then carry out a detailed inspection of the building and will give you a relatively comprehensive report on the nature of, and defects in the structure. He should be able to give you approximate costs for bringing the property up to scratch and to advise you on appropriate specialist firms, if you require any. The professional surveyor may well be able to advise you on market values as well. This approach is relatively expensive and you may decide that your own initial survey will be sufficient for you to decide whether you need to spend on the cost of such a report before you go to the auction.
3. You can obtain a House Buyer’s report of the kind promoted by the Royal Institution of Chartered Surveyors. This report will certainly cost less than the full building survey but is in my opinion of only limited value. You get what you pay for and this report will only give you sketchy comments on likely problems in you building.
And how, you may ask, is a property valued?
Obtain as much preliminary information about the property as possible, in particular:
(a) Tenure of site.
(b) Any tenancies.
(c) Size and extent of accommodation and site.
(d) Any peculiarities of the district, situation and site.
(e) Recent sales, purchases or lettings of the building or ones close by.
- Thoroughly inspect the property inside and out.
- Ascertain any outstanding defects and deficiencies that need remedying to bring the property up to good standard.
- Make a provisional estimate of the costs of curing those defects or deficiencies using specialists where appropriate.
- Judge the effect of those costs on the mind of a hypothetical buyer.
- Obtain details of recent transactions of comparable properties.
- Adjust those transactions for any rise or fall in the market over the period in which they have taken place.
- Compare and adjust the information from those comparables so that it relates as closely as possible to the subject property.
- For vacant properties use as far as possible values from other vacant comparables.
- For investment properties consider rental levels as well as yields of comparables.
- Allow for differing states of repair.
- Come to a conclusion in the light of your analysis which you would hope will equal that of a would-be-buyer.
And, finally, let me give you the wisdom of the very first valuation lecture I ever attended:
“If”, the speaker said, “you are going out to value a property in a district with which you are not familiar, talk about it over lunch at the local pub, ask where it is in the local Post Office and make sure that you need to ask the way at least three times before you get there. By then you should not even need to go to see it, having been told all about it before you arrived!”
Unfortunately, with the local pub and post office now gone, you may have to rely on the local estate agent, the postman, your wits and my advice, but I’m sure you will come to the same conclusions! Good luck in your research.
The Secret Auctioneer