Property purchase due diligence, what does this include? (Portland, Corvallis: real estate, apartments)

[jgsocal]

When someone is considering buying a property, an often used phrase is - "Do your due diligence".
What exactly / specifically does this include? Typically in escrow, a title company will ensure there are no leins on the property, and a home inspection company will (hopefully) pickup any flaws in the home itself. I know also that in rural areas the well and septic systems should be tested or inspected.

So beyond the obvious, what other things should be done, what questions should be asked, and if possible, to who or where should the inquires be directed?

Thanks in advance!

[PNW-type-gal]

Probably be better answered in the Real Estate forum (and, if you are in Oregon, you should add that to your post because the laws vary - widely - across the country).

In general, though, there are things beyond the state of the title and what the home inspector finds - such as:
-- if the property is listed as having acreage, does it, in fact, include all that acreage and where are the boundary lines (might have to go down to the county and pull maps if available or even hire a surveyor).
-- Is that space converted to a basement apartment actually a legal rental unit?
-- is there an easement not listed?
-- were permits pulled for things that need permits?

These are a few things that we caught on various properties we looked at. In theory, the seller should have disclosed a couple of those things.

[scottinpdx]

I always thought that was just a clause in the listing so the seller isn't responible if the buyer purches the property and later finds out they can't do what they wanted to do with the property.

[Nell Plotts]

In addition to a home inspection:

In Oregon buyers need to check zoning on rural property they hope to build on. There are a lot of restrictions to assure that the land is used for farming.

ALWAYS have the site surveyed and markers place, walk the survey looking for encroachments. Ask about easements, read the terms of the easement and have its 'corners' marked.

If there is a well it must be tested (Health Department certification) at property sale.

If you have a septic system have that inspected.

Look around at the soil conditions. If on a hill look for signs of instability, if low and flat find out if it is subject to flooding. Flood insurance may be required by a lender and it isn't cheap.

Other problem I have seen: a waterline breaks near a home on a slope and the water causes soil instability and the house slides. (happened to a house on the edge of Balch Canyon on the west end of Raleigh Street some years ago.) Notify the City immediately at signs of waterline break or seepage. There has been a lot of infill construction on our hills which means that the soil has less capacity to absorb rainwater, add to that the fact that the City is requiring dry wells for downspouts....

[Larry Caldwell]

There are a lot of things to check that people normally overlook.

When was the water service installed or well drilled? If the water is metered, what is the monthly usage for the last year? How much water will come through the pipes. I have re-piped the service entrance because the old galvanized pipes were corroded almost shut.

What are the sewers like in the neighborhood? I know of one neighborhood where the pipes are flat. The sewage used to run one direction and now it runs the other direction, because the city moved the location of the sewage treatment plant. It causes endless problems for the home owners.

Where are the property boundaries? People often find that the city Right of Way is just a few feet from the front door, and they really don't own their front yard. Check the assessor's plot map. The Right of Way is normally 60' but only part of that will be developed. This can be a problem in the country too.

Never buy rural property unless the septic has been pumped and inspected by a licensed contractor. A failed septic system can mean thousands of dollars in expense.

Check with the planning department about what is allowed on your property and what is allowed at neighboring properties. Some people get upset when they find out there will be 5000 Christians camping at the neighbors for a week every summer. There are also seasonal rural industries like seed cleaners you can hear a mile away, a shooting range that wasn't in use on the Tuesday you looked at the property, gravel quarries blasting and running rock crushers, etc.

See if you can get the local fire marshal to do an inspection. That basement bedroom might not be a problem, unless it lacks exiting and can trap your children in a fire. This happened in Corvallis several years ago. Dad bootlegged a bedroom into the garage without a permit. The house caught fire and trapped his two teenage daughters in the bedroom. The fire department could hear them screaming when they arrived, but by the time they got the chainsaws out and cut a hole in the side of the garage, the girls were dead. Don't buy a death trap.

Be careful of flood insurance. The feds are closing out their flood insurance subsidy. Insurance in a flood zone may cost you more than the mortgage payment. The planning department should have FEMA flood zone maps. They should also have designated geohazard zones. Home insurance does not cover dirt. If you have a landslide, you will be barefoot.

Most buried fuel oil tanks have been decommissioned and removed. Make sure you don't get stuck with one.

No property is perfect. When you buy a place, you buy both the assets and the problems. Due Diligence just means you have covered your bases and aren't going to be blind sided by something that will ruin your year.

[Nell Plotts]

Sewer connections all should have a backflow valve. S**t doesn't always flow downhill. You won't really learn this unless you have your sewer line scoped.. which actually isn't a bad idea as if it leaks at all tree roots will go where there is moisture and nutrients. A few years ago I was a Sewer District Commissioner, one of our customers had sewerage backflow into their home. The building plans called for a backflow valve but when excavating the line there was no backflow valve, the plumber wanted to save a couple dollars.

In that community there was an outdoor shooting range... once out of the city but now in the city. New arrivals to that town who purchased homes in that neighborhood were not happy.

I cannot confirm strong enough the flood zone map research. It doesn't matter if only part of your yard is in the flood zone, the lender will assume improvements are as well. This is also an issue when you obtain a new mortgage.

[jgsocal]

All great information. Cannot thank you all enough!

[Nell Plotts]

In the City of Portland (maybe all Multnomah County) you can see building department permits online at PortlandMaps.com (maybe .org). It doesn't go back a real long time but if you see a house where there has been remodeling ask to see the building permit. Not everyone keeps those and the building department old records are a mess but it is worthwhile asking. If a room has been added or remodeling performed it is easy to buy an hour of an architect's time to have them take a look for just exits in case of fire.

My husband hyperventilates when he sees those homes to be remodeled for basement apartments in Canada. Thankfully the remodeler obtains permits and provides proper exits when he remodels but when DH sees that prospective buyers think the building already has a viable apartment shivers go down his spine.

[StealthRabbit]

Originally Posted by jgsocal

All great information. Cannot thank you all enough!

more info would be a WORLD of help to those trying to address your question.

Rural / city is probably most important (septic, wells, appropriate zoning, legal placement permits, easement infractions, permitted structures, proper access,

Stick, concrete, or factory built (modular)?

Multi Family, single family, commercial?


Then there are the minor things (home inspection, quality of neighbors (hint... they aren't gonna move)), Flood plains, setbacks...


First and foremost for me on Due Diligence is go visit the tax assessor. I have places across the street from each other that are in different tax districts and have different levies by 100% (One place is 2x the property tax for same valuation)


I buy lots of places off internet / sight unseen and seldom use a realtor and often buy commercial (risky Due Diligence), so it is not impossible to handle this... just be wise.

I write in SEVERAL "walk Clauses" so I can retain my Earnest Money and walk away, for any reason specified in my contract. Can be as simple as "Buyer must Fully agree to property boundaries, easements, and have access to walk the property and gain approval of principle purchasers, including spouse! (seldom are we together at same place viewing a prop and writing an earnest money agreement, we are always shopping on our own or one of us is overseas)

[jgsocal]

Thanks Stealth rabbit,

I realize more specific info would make it easier to address my needs. I purposely made it a bit general in nature so that other readers may find it useful to their situation as well. I often see the phrase "do your due diligence" and was hoping to collect a checklist of sorts to benefit myself and any others in similar, but not identical scenarios.

That being said, my specific property, now that I have narrowed it to one:
It is rural, on 20 acres in Josephine county. Very old stick built home.
I already knew to have the well and septic investigated, and checked with the county for what info I could get over the phone. I'm having a home inspection done during escrow. I am out of state, so it makes some things a bit tougher.

And your "walk clause" is going in my counter offer today!

Thanks again.