When you’ve found your dream house and are walking through it, admiring the maple floors and checking the water pressure, keep in mind that unlike your car or stereo your house can’t be moved to a new neighborhood or community if you discover problems later. You are not just buying a house. You are buying the neighborhood, the community, the school system and even the geological structures underlying them. Look around! Drive around! Talk to neighbors and meet with the city planner! Point to the house on the map and tell the planner that you are buying it. Ask the planner if there is anything you need to know about the area, the community or the neighborhood before you make that investment.
Current Uses of Nearby Properties
One of my clients found a great home in the Boulder foothills surrounded by scenic open space. It turned out that that this “open space” was a Boy Scout summer camp, which meant bugles all summer at 6 AM and camp songs until 10 PM. My client actually liked the idea of living in proximity to the camp, but he bought the home knowing he might have bought a resale problem. If the house next door is used as a rehabilitation center for recovering drug addicts or sex offenders, you may want to know that. If the airport, landfill, or poultry rendering plant is six blocks away, you had better know that.
Boulder, Broomfield, and Jefferson Counties, as well as most of the towns and cities in the area, have purchased substantial property to preserve as wildlife habitat and open space. Combined with the relatively dense housing development in many of our towns, this has put a substantial premium on homes backing to undeveloped farmland or natural terrain. If you are looking at a home that is near undeveloped land, meet with the city or county planner, locate the property on a map, and find out what the current status of the property is. Also ask pointed questions about what the possibilities for future development are. Do not rely on the homeowner, the neighbors, real estate agents, or anyone else for this information. If the “open space” behind your home turns into a four-lane highway or a mall, you’ve made a mistake that may cost you tens of thousands of dollars on resale.
While this can be a very difficult issue to investigate, buyers of rural, mountain and commercial properties in particular should consider how the property may have been used by previous owners. For example, if you find a dump site with old barrels, you could be buying into a hazardous waste site that could quickly bankrupt you. Issues of prior use can impact more urban subdivisions as well. Homeowners in an unincorporated area of north Boulder discovered several years ago that a film processing plant had contaminated the ground water. The EPA threatened to make the area a Superfund site unless the homeowners agreed to annex to the city of Boulder and connect to the public water system. There are only two things I can recommend here. First, ask city or county planners about previous uses of the property. Second, if you have concerns, there are companies that will conduct an environmental risk assessment for you.
Homeowner’s insurance will generally cover you for water damage resulting from a broken pipe in the bathroom, but it will generally not cover you for damage from water that originates outside the home. Flood insurance
is available nationally through FEMA, the Federal Emergency Management Agency, and typically costs one to two times the cost of normal home owner’s insurance. Flood insurance coverage is available whether you are in a high risk zone or not. It can be valuable if your house is flooded by a break in a water main in the street, since you home owners insurance generally won’t cover you for this.
Though our area is relatively arid, there are flood hazard zones along most streams, even very small ones that you might not be aware of. These flood zones often spread over areas quite distance from the stream bed itself. Nearly all mortgage lenders will require a flood zone analysis and flood insurance when needed, but when you find this out from the lender it may be too late for you to back out of the deal if that’s what you want to do.
Not only will you have the added expense of flood insurance if you buy a home that’s in certain flood hazard zones, but flood risk is a significant resale issue for many home buyers. And in some areas, it is a real safety issue.
You can review the FEMA flood zone maps at city and county planning departments. For the City of Boulder, there are more detailed maps of flood zones that locate individual homes relative to the flood zones. These maps can be seen at the planning office (303-441-3270) or they can be accessed on line by selecting Floodplain Map on the city’s Floodplain page.
Coal mining was an important part of the local economies in the Colorado Front Range through the first half of the 20th century. Many of the towns in our area, including Superior, Louisville, Lafayette and Erie, as well as Frederick, Firestone, and Dacono to the east in Weld County, began as coal mining towns. Nearly 50,000 acres were undermined along the Front Range.
This becomes a concern for home buyers because underground shafts can collapse and cause subsidence on the surface. If this subsidence were to occur under the foundation of your new home, you might have problems. The State Geological Survey has mapped these mines. In Boulder County, geological studies have been conducted, resulting in detailed maps indicating risks of surface level subsidence. These maps are available at most local planning offices. If you find your new home is located in a risk area, you might call the mining section at the State Geological Survey (303-866-2611).
Currently, this is not a significant resale issue in our area. There have been few if any reported cases of home damage resulting from surface subsidence, so most people are unaware of the issue. However, if a subsidence event did occur while you were trying to sell a home in a high-risk subsidence zone, you might have problems. It’s worth checking. The state has a subsidence insurance program available, but there are restrictions, particularly on the age of the home (800-44-MINES).
Streets and Traffic
A home backing directly to a busy street is one of the most difficult resale hurdles to overcome. My advice to clients when we find a home located on a major arterial street is not to go inside. In many cases, these homes will have larger backyards and better views than other homes in the same neighborhood, but they are still much more difficult to sell, particularly in a slow market. In many cases, these homes sell only when a buyer is forced to buy during a brief home buying visit financed by the employer and this home is the only thing available for immediate occupancy. What happens if you buy this home and want to sell in a slower market? If there are 10 other homes available in the same subdivision with no direct exposure to the street noise, your house won’t sell.
In Colorado, much of the money raised to support basic public services like schools, water and sewer districts, and city or county government is raised through local property taxes associated with special purpose taxing districts. The standard Colorado purchase contract
urges buyers (see Section 8.4) to review these districts prior to purchasing a home and provides the right to terminate the contract if the tax liabilities are unsatisfactory.
The presence of this language in the contract derives, in part, from a series of financial disasters that occurred in the late 1980’s in Colorado in connection with taxing districts called “metropolitan districts.” Generally, metropolitan districts are formed by builders and developers who sell bonds to raise the money required to build the infrastructure (e.g., water, sewer, etc.) for new developments. These bonds are paid off through taxes paid by people who buy homes in the development. When the oil bust hit Colorado in the latter 1980’s, several developers went bankrupt, leaving construction at a standstill. The developer may have planned 1000 houses in the development, and sold bonds to cover the required infrastructure, but then they sold only 100 houses. Suddenly, to repay the bonds, these 100 homeowners were faced with real estate taxes ten times the amount they expected. The State’s Division of Local Government (303-866-2156) is responsible for monitoring the financial well-being of local taxing districts and can provide you with good information on any taxing district you are concerned about.
Crime is a consistent and legitimate concern for home buyers because it has implications for personal safety as well as resale values. It does not emerge as a central concern for most of our local clients, because crime rates in the area are comparatively low. If you are concerned with crime rates, I would recommend comparing the crime rates in our communities to other communities you are familiar with nationwide. Check the FBI’s Uniform Crime Reports (Crime in the United States)
for reliable information. Their chart that reviews crime statistics for all cities in the country with populations of 10,000 or more is particularly useful. Similar information is available in simplified form at www.homefair.com
If you need information on variations in crime rates within local communities, try calling the local police department. In my view, talking with neighbors or co-workers is as likely to mislead as to inform.
Even if you don’t have children and don’t plan to, you should be hesitant to buy a home in an area with poor schools. Good and safe schools are an important criterion for many home buyers. When you are selling your home, you want the schools to be a selling point rather than a hurdle to be overcome. In general, the schools in the area are very good, but there are certainly differences between various districts and schools. Check out our section on School Information
for some good resources for data on schools and school districts.