Information for Real Estate Projects

Information for Real Estate Projects

Buying or selling a house or property requires a lot of research and understanding of the condition of the property to make the investment decision whether to buy it or how to price it. Structural engineers who help the real estate industry come across great information about properties that can help you and your real estate team make the final decision. A-1 Engineering has been helping realtors, buyers, sellers, and property managers across Austin and San Antonio since 2011. We believe that information and understanding are powerful, so we compiled a list of helpful sites and discussions to empower you with additional knowledge for your real estate transaction. The information provided does not substitute for good judgment that actual professionals can provide you for your specific project; so consult with your attorney, real estate broker, home inspector, lender, appraiser, investment consultant, and structural engineer, as needed.

1) Lender Required Assessments

a.      Lenders might ask for a structural assessment following the suggestions from an inspection report or appraisal report. We can help with those structural assessments.

b.     The most common structural assessment needed for these types of inquiries is an ASCE Level A report. This report is a first-impression assessment that an engineer completes of the house and its foundation. 

2) Permits 

a.      Selling – If you are selling your home, double-check with your local municipality to see if you have any open permits on file. It’s good practice to have your property cleared of any open permits.

                                i.            Do’s –

1.      Make sure any improvements to the house are completed with permits.

2.      Hire licensed electricians, plumbers, contractors, structural engineers, roofers, and carpenters to help you with major repairs.

3.      Compile all structural engineering, warranty, and insurance reports for your property into a file to share with other professionals that might be assessing your property.

4.      Fill out your seller disclosure with guidance from your real estate professional and attorney, as needed.

5.      Structural engineers who assess houses are particularly interested in the following:

·         Historical fires

·         Historical warranty or insurance claims

·         Plumbing issues or repairs

·         Drainage problems where water is known to have been entering the building

·         Locations of known wood rot

·         Structural modifications to the house

·         Additions or expansions of the building

·         Foundation repair: scope, location, and contractor that completed the work

·         Known repairs to roof for roof leaks

                              ii.            Don’ts –

1.      Do not pull permits for contractors to save money. Licensed contractors should be able to pull their own permits for work that they have to do.

2.      Do not assume that a permit is not required. If the contractor says a permit is not required, call the city to verify. Most cities are very eager to help you with your project.

3.      Contrary to some belief, pulling permits costs, on average, about $400 or less for most work. Pulling permits does not increase your construction costs. Better yet, the construction cost should remain the same, since the contractors are expected to complete the work in accordance with the minimum code requirements. Anyone who does work below the code minimum is working below the legal limits.

4.      We suggest that you hold final payment for work completed once you have proof that the permit is closed. Again, you can always call the city and double-check or use the city’s online search feature to check on the status of permits.

5.      Don’t assume the structural engineer or other engineers pull or manage permits, or are somehow above the requirement of having permits pulled. Just because an engineer is involved on a project does not mean that permits don’t have to be pulled. Engineers are not required or obligated to check for permits because they are the owner's and contractor’s responsibility.

b.     Buying – Now that you have found the house of your dreams, verify that permits have been closed. Checking the status of permits, the permit types, and the number of permits provides valuable insight into which improvements have been completed, who completed them, when they were completed, and whether final inspections were completed.

c.      Open Permits – open permits can mean a lot, so don’t assume that an open permit means or suggests something is bad. Sometimes permits remain open because some fees have not been paid but all inspections have been completed and passed.

Here are some additional “Do’s” and “Don’ts”

i.                    Do’s –

1.      Do open and check the status of all permits. Regardless of the type of work

2.       Do check that all inspections have a final pass, especially for electrical, plumbing, framing, and other structural or utility modifications to the house. Some inspections may have failed for the work, so check that a final pass is on record.

3.      Make note of who permitted the work. Knowing the person or company that permitted the work will help you manage any warranties or guarantees that come with the work.

4.      Check with the Seller on whether any work completed comes with warranties or guarantees.

5.      It's not a bad idea to ask the seller for additional explanations on why certain repairs were completed. It might provide additional information about a specific event (e.g., a fire, flood, or plumbing issue).

ii.                  Don’t –

1.      Don’t try to close the permit on a house you don’t own yet. Check with your attorney or real estate agent.

2.      Don’t assume that an open permit is bad or means that work was done incorrectly. Check the status and inquire why the permit is open, then ask the city what is required to close it. Sometimes fees are still pending, which can easily be paid to close the permit.

3.      Once you buy the house, don’t assume the responsibility of the permit. Ask the contact person on the permit to take care of it.

3) Dangerous Buildings (Distressed Properties)

Few buyers and sellers know that the City of San Antonio and the City of Austin record and file property code violations. And that the violations go with the property and not with the owner or tenants. For example, say the city code enforcement files a citation for storing cars and debris on the property. The owner cleans up the property, BUT the citation may still be open and unaddressed. Or say the property has a history of citations and fines are assessed to the property but never paid. The main issue here is that property violations can carry unpaid fines, and new buyers can be stuck with them.

Here are some “Do’s” and “Don’ts” for code enforcement violations:

i.                 Do’s –

1.      Do check that no fines are unpaid or violations are still open. Remember, fines go with the property so they become yours once you buy the house.

2.      Hire a structural engineer to help you with structural violations of the house.

3.      Sellers, it might be a good idea to disclose any historical violations of the house and provide documentation of resolution.

4.      Read and become familiar with the City of San Antonio Property Maintenance Code.

5.      Check that any repairs to the property to clear violations are permitted and coordinated with the city to clear the citation.

6.      Check the City of San Antonio Code Enforcement website for a list of violations

7.      Check the City of Austin Code Enforcement website for a list of violations

ii.            Don’t –

1.      Do not assume that new or recently constructed houses or properties have no violations. New homes can have code enforcement violations for building new structures without a permit.

2.      Do not assume that pretty houses or well-kept houses do not have violations. For example, say the house was in a fire, and the owners took way too long to start repairs. The city code enforcement division could have issued citations for the property and imposed fines to motivate the owner to begin repairs. Just double-check.

3.      Don’t assume that a property with historical violations is a bad property. Violations that are closed and resolved are good for the property and the community.

4.      Don’t ignore any notices or letters from the city from the code enforcement division once you buy the house. Additional details may be provided, or additional action may be required to resolve the violation.

4) Houses with Foundation Repair

It's very common to find houses across San Antonio and Austin that have had foundation repair. So, here is some information that will shed some light on the condition of the building:

a.      Sellers:

                                i.               Compile all historical documents, warranties, and guarantees for the repairs.

                              ii.               Write a short narrative as to why the repairs were made. Some owners make repairs for preventive reasons, personal preference, to level floors before renovations, or because an insurance or warranty company covered the cost of repairs based on its structural engineers' evaluations. Nonetheless, the reasons for the repairs are helpful for the buyer in taking over the property's maintenance.

                            iii.               Double-check that the foundation repair company opened and closed permits for their work.

                            iv.               Get a third-party structural assessment for the house. An ASCE Level A assessment is the most common structural assessment that can help communicate the current condition of the house to your prospective buyers.

                              v.               Double-check that you have the engineer’s certification report.

                            vi.               Double-check that you have final elevation readings or the most recent readings from the foundation repair company.

b.     Buyers:

                                i.            Invite the foundation repair company that did the work to visit the site and provide a written assessment on the condition of the repairs that they did. More importantly, you should know whether there are any existing conditions that might void the warranty on the very day you buy it. 

                              ii.            Ask the foundation repair company for a copy of the baseline readings (final readings) measured after the repairs were made. This is super important. How will you and the foundation repair company know how much the house moved if no one knows the measurements after the repair? The baseline readings after the foundation repair was completed will tell you. You need to know this for warranty purposes.

                            iii.            Ask a structural engineer familiar with foundation repair to assess the condition of the building and review your documents. Here is where A-1 Engineering can really help. We specialize in foundation repair, so we can help you understand what you are buying. 

                            iv.            Get a Foundation Elevation Survey of the floor before you move in. This information is great for monitoring your house. This information can be used in the future in case you have a dispute with the foundation repair company.

                              v.            Get a plumbing leak detection test. No one will tell you if you have an active plumbing leak unless it is specifically tested for. Active plumbing leaks typically void foundation repair warranties, so you might end up buying a house with active plumbing leaks that has already had foundation repair. So get the plumbing tested.

                            vi.            Have a third-party structural assessment on the condition of the house. An ASCE Level A assessment will give you perspective on the house's condition. This assessment is also great for continuity, helping you sell the house when it’s your turn.

5)  New Houses (Brand New or Houses less than 10 years old)

Yes, even newly built or recently built homes can have some issues. It is not a bad idea to get the following:

·         Recall from our discussion about permits: double-check that all permits have been closed for the new house.

·         Plumbing Leak Detection Test: From the permit search, you can find out which plumbing company constructed the plumbing system. It is not a bad idea to hire them or a third party to check for plumbing issues.

·         House on sloping properties: It is very common for homes built on slopes to have plumbing issues due to the fill material used in the foundation. Without getting too technical, the plumbing can break due to the weight of the foundation. Houses built on rocky terrain also have this issue.

·         Sellers, compile a history of warranty calls or claims.

·         Buyers, check if the house has a builder’s warranty.

a.                  If the house has a builder's warranty, get a foundation elevation survey before you move in. Foundation elevation surveys are super valuable when you have to dispute a warranty claim for foundation problems. The survey sets the baseline readings now that you own it, so if the house moves, you can show the warranty company actual readings measured by a structural engineer. 

b.                 But be sure to understand what type of warranty, what it covers, and how to get it transferred to you.

·         New homes that have had foundation repairs: go back and read the previous discussion that we had about homes with foundation repair.

You are always welcome to call A-1 Engineering, LLC to see how our San Antonio or Austin engineers can help. We have structural engineers and drainage engineers who can provide you with great insight into the condition of your property.