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How to know when to back out of a second-home deal

By Caitlin Kelly

Although I can call myself a homeowner, I can’t call myself a house owner. I’ve only enjoyed brief visits to the houses owned by my father or late mother, living thousands of miles apart in my native Canada, or staying with generous friends. I so wanted to be able to welcome them in return, to set out pretty towels and have a proper guest room.

I’ve lived for decades in the same one-bedroom suburban New York co-op apartment, a post-war red-brick building with stunning views of the Hudson River in a pretty town, but resentfully subject to its limited space and endless rules—No bird-feeders! No hibachis! No holiday lights after the holidays!

Then a windfall inheritance from my mother finally gave us the means to look more seriously at a single family home, albeit on a tight budget. As someone who formally studied interior design and has written on the subject, I wasn’t scared of a fixer-upper, within limits.

I’d been scouring real estate ads for the past few years in my native Ontario (now completely priced out) and in less-costly, more rural Nova Scotia, where, even a year or so before the pandemic, $100,000, (Canadian, $80,000 U.S.), could easily have bought a lovely home built pre-1920 or earlier, my preferred esthetic.

When I recently spotted a charming house, from around 1906, a sunny two-bedroom with original pine floors on a small lot in a tiny (pop. 300) fishing village – at $99,000 – I pounced. It meant taking a car ferry for a five-minute journey to reach an island, which has a working lighthouse and ready access to whale-watching. Even if it’s only used as a summer home (no heat), it sounded perfect.

We had an accepted offer of $76,000 within a few weeks and, at the start, no other buyers were competing with us  which is rare these days. I made our offer conditional on five things: an official home inspection, a well inspection, a septic inspection, getting a mortgage and my own personal inspection. I knew the odds of getting a mortgage, as a Canadian, but nonresident, were almost impossible; even then, Canadian banks demand 35%  down.

I was very lucky — my best friend from high school, who has designed and built her own two rural homes, and who now lives off-grid on a lake in Nova Scotia, had made the seven-hour round-trip drive with her husband, a carpenter, to see if the village and house were even worth my spending $2,000 for airfare and car rental to fly up from New York. They were.

So my hopes were high when I arrived with a tape measure, notebook and lots of ideas, later returning with a general contractor — an elusive quarry in an era of red-hot real estate sales — to create a punch list.

After meeting with experts in wells, septic systems and more; and talking to the locals about the ease of life in the area, we, unfortunately, bailed at the last minute.

 

Some of the painful lessons learned:

 

  •  If you’re buying in a remote or rural area, you’re at the mercy of a small pool of labor and expertise. It may be difficult to find  a licensed plumber, electrician or general contractor for necessary renovations. Our Nova Scotia friends had to wait a full year, pre-Covid-19, to get their general contractor and a local realtor said this was the new normal.
  •  How experienced is the realtor representing your interests? While ours was pleasant and helpful, she had barely 18 months’ experience — and sometimes that hurt us— as she scrambled to help us locate the many tradespeople whose expert opinions we needed.  If no one else is bidding, why?
  • Ask, and keep asking, what village, town, county, state/provincial and federal regulations might affect your property and what changes you can legally make to the land and every structure. How much time will you need to get those necessary permissions —and will the seller give it to you? The sellers (and their realtor) may not know — or may be hiding essential information from you that could, as it did for us, possibly render your “dream home” uninhabitable, illegal and unsellable. The engineer we hired (for an additional, last-minute $1,000) said we probably needed three weeks to seek and potentially win necessary government approval to install a wholly new septic system (another $12,000).
  • How good is local wi-fi? A new service offered by Elon Musk, Starlink, did offer us hope of quick and reliable service, even in a remote spot.
  • Panic buying during the pandemic has massively inflated prices and created a feeding frenzy for realtors and sellers that leaves every buyer — especially a first-time buyer — more vulnerable. Once competing buyers show up, the pressure to move fast only accelerates and can leave you with tremendous buyer’s remorse.
  • Never stop asking questions! Don’t be the least intimidated if you don’t understand unfamiliar lingo or jargon. Be prepared to drop thousands of dollars for clear and highly detailed inspections. Take lots of detailed notes; an email paper trail is also useful for reference. Also, take plenty of photos and videos.
  • If something feels off, it is!
  • My obsession with the untouched period charm of the house and my eagerness to update its interiors was blinding me to local conditions that would also have made life there unpleasant and expensive, like missing the hourly car ferry which means losing valuable work time. I was warned no one would even deliver a sofa that far because of lost waiting time, and other essential regular services, like pumping out the septic, would cost more due to the travel time.
  • How far away is the home from the nearest hospital and trauma center? Is there a local EMT or volunteer ambulance corps? Medevac? While remote and rural locations can offer silence and natural beauty, accidents and emergencies do happen.
  • Set as many conditions in the offer as you feel necessary, each of which can offer you an escape clause if you discover serious, expensive and/or unresolvable problems with a property,  which we did. Then you can flee, legally.

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