There are lots of things to consider when purchasing a property. If you are looking to purchase a home for your family, you are likely to consider things like its capacity to accommodate a growing family (if you have, or a planning to have kids), its proximity to good schools, whether there are good amenities nearby, whether you’ll be able to have a comfortable commute to and from work, and how much it’s going to cost. Even if you are looking for an investment property, these considerations are still important because they’ll determine whether or not your property is attractive to renters. Buyers know to pay attention to issues related to the location, size, and value of the house, but many fail to look much deeper, and therein lies the risk. A property may be prone to risks that aren’t immediately apparent. You have to be very keen so that you don’t miss any underlying issues that may present disastrous consequences for you later on. Here are 3 serious risks that you have to consider when purchasing a property.
Before purchasing a property, you should screen it for chemical contamination. In an increasing number of incidences, buyers are finding out that certain properties are chemically contaminated as a result of the illegal activities of past occupants. In a recent news story, a man who was set on buying a repossessed house was shocked to find out that it had extreme levels of meth contamination. When this buyer learned that the previous occupant of the house was involved with drugs, he got curious, and he decided to have the house tested. As it turned out, the tests indicated that the house had methamphetamine readings that were extremely high, meaning that the buyer was about to sink all of his life savings into what was essentially a meth lab. This one buyer was lucky because he found out about the contamination before closing the deal. Others in his position aren’t always that fortunate. Buyers who find out about chemical contamination after purchasing a property can end up spending a fortune trying to decontaminate it. Worse still, buyers who move into contaminated properties without knowing it may be exposed to serious health risks.
Some properties may be exposed to various environmental liabilities, including soil contamination, and groundwater contamination. When you purchase a property, all the environmental liabilities linked to that property will be transferred to you, even if you didn’t know about them at the time of purchase. If you are buying land with the intention of developing it, you should hire an environmental consultant to test it for soil contamination and other environmental liabilities. Don’t trust the environmental reports generated by the seller. Instead, do your own due diligence. Your environmental consultant should be able to tell you whether there are contaminants on the property, whether the concentrations are manageable, and how much it would cost to rehabilitate the property. Don’t purchase a property unless you are absolutely sure that the environmental liabilities associated with it (if any) are manageable.
Some properties are in areas that are prone to natural hazards. In Australia, common natural hazards include bushfires, floods and cyclones (earthquakes are rare, but nonetheless still a risk). Before buying a property, you should study the natural hazard risk profile of the place where its located. If you are a developer, an area with a high hazard risk profile means higher development costs and restrictive building codes. If you are a house buyer, you’ll have to deal with higher insurance premiums. Before buying a residential property, ensure that it meets (or even exceeds) the regulatory standards for natural hazard protection in that area. Try to avoid purchasing property in flood zones or area that are at high risk of bushfires. However, if you can’t avoid it, ensure that your insurance coverage is comprehensive enough and that there are reliable warning systems and disaster management infrastructure in place so that you can evacuate in time if a hazard strikes.