Shortcuts
The influx of buyers seeking Hamptons homes over this past year and a half means a few things: Offers are coming fast, the process is moving slow, and all involved are frustrated.
Let me break that down a bit. Although running low on inventory, demand remains strong. There are multiple offers for the right house (not every house, but a good number of them). Bidding wars are common, and so is the phone call that you can’t buy the house you saw yesterday because it’s already sold. Because of the volume of sales, all of the steps required to actually close the deal are taking longer than ever. Mortgage commitments are taking months instead of weeks. The surveying company still hasn’t called back. Getting an updated certificate of occupancy (CO) feels impossible. Just about every service involved in a successful deal — appraisers, surveyors, attorneys, and brokers are only a few — is overtaxed and moving at a slower pace than they have in recent years.
For a homebuyer or seller caught in the middle, the general atmosphere of urgency crossed with the stifling process delays is nothing short of infuriating, and everyone is looking for a way to reconcile the two.
Enter: shortcuts.
There are some steps you must have to buy a house (financing or cash) and some you should have, just to be safe. In some municipalities an updated CO is required; in others, getting one is highly recommended. Can you do without the “should-haves,” if all your “must-haves” are in place? To move deals along, plenty of people are trying it — not just in the Hamptons, but across the US.
Should I take a shortcut to buy or sell a house?
Short answer: I’m not going to recommend it across the board, but it might not be the worst idea in specific situations.
“Should-haves” were put in place to protect buyers and sellers in the future. A CO, for instance, verifies that the house is what it says it is (you’d be surprised how many people think they have more bedrooms than they do or more lawn than they should) and that it’s safe to occupy (that’s measures like a fenced-in pool area). Can you buy a house without an updated CO? Technically in some places, yes. Should you? Maybe.
If cutting corners like getting an updated CO — I’m going to focus on that one here because it’s a) a big project, b) your offer will look more attractive to a seller if you are willing to purchase without a CO and, c) a corner some purchasers want to cut where possible — enable you to get into a market you want to be in and you remember to correct the existing issues after you buy the property, maybe it’s OK to cut that corner knowing that it will cost you time, money, and effort later to correct it.
It’s smart to find out, even if you aren’t going to get the updated CO, what you’re going to need to do and about how much it will cost before you sign on the dotted line. Sometimes, the changes can be expensive, like re-vegetation, new fencing, an upgraded septic system or demolition of improvements not done to code. By the time you decide to resell your new property, things might have changed. Rules and regulations only get more stringent over time, and you’ll need to play by the rules at the time of your own future sale.
This is the reason I wouldn’t recommend forgoing an updated CO if you aren’t going to take the time and money to correct outstanding issues on your own time. There’s no guarantee your own future buyer will agree to do the same, or that your municipality will still allow it by the time you’re ready to sell. It sounds strange, but people tend to forget the original condition of the house, and what they changed and added over time. Or, they make changes without a permit and remember that the builder said it was OK. You’re going to have to address so you might as well do it now while you remember.
I should add a caveat here: Any local attorney will tell you that should-haves are must-haves, especially in the case of an updated CO. That’s because local attorneys, unlike attorneys from out of town, have seen every conceivable thing go wrong in a local real estate transaction. Their job is to protect their clients (and I’m sure they would prefer not to end up fighting a lawsuit of their own) so cutting corners isn’t in their operating procedure.
You can’t take a shortcut on everything
Buying a house is not like buying a sweater. To put millions of dollars into a property you can’t use as intended is — pardon the expression, but — really foolish.
For a buyer, a happy medium is to just ask for an updated CO. If the seller refuses, at least you know there must be something to be fixed and you can bring in a contractor who can tell you what needs to be done to correct the situation.
I understand the urgency of skipping the updated CO. In this market, a seller can just move on to another buyer who won’t insist on one or try to get a discount for the changes. Go ahead and build the updates right into your planned spend.
One of the most expensive mistakes people make is falling in love with a home and not looking at the reality of what it will cost, from necessary updates to regular carrying costs. It’s better to face realities upfront and if you still want to buy the house, buy the house. You can cut corners, but know that doing so does not eliminate the problems.