You may wonder why utilities can become a problem, when you try to buy a home. In quite a few Columbus OH homes for Sale utilities have been shut off. Many buyers and their Columbus real estate agents end up struggling with utility issues just days before they plan to close. Some even lose their contract, due to utilities.
Let me share some tips on what to do, if the utilities are shut off.
Why must utilities be turned on?
There are really 2 reasons:
- You want to know for yourself that the mechanicals in the house you plan to buy are working. You always should hire a property inspector to check the furnace, make sure the plumbing does not leak and the lights can be turned on safely.
- Your lender will require that the mechanicals are in working condition, and will require them tested during the appraisal.
Now you know, why utilities must be turned on, but why is it a problem?
When you make an offer on a distressed property, such as a bank-owned, REO, HUD home or short sale, you may run into issues with utilities. Most of the time they have been turned off by the seller. So you have to get them turned on, at least temporarily, for the property inspection and appraisal.
Let’s take a closer look at the different types of sellers, and how to handle the utilities for each case.
- Regular Retail Sale: If the seller still lives in the house or just moved, the utilities will be on and in the sellers name until the closing. You won’t have any problems in that case. If the seller has already moved and turned off the utilities, you should be able to have them turned on again for your inspection.
- Distress Sale, Short Sale: If your seller has financial difficulties and is behind on the mortgage payments, you should expect that utilities are also past due. Often they have been shut off for non payment. In that case, it will be almost impossible for the seller to turn them on again without paying all outstanding fees, which the seller can’t afford. So the buyer will have to step up and temporarily put the utilities in their name, at least for a few days to complete the inspection and appraisal.
- Bank-Owned Homes: Here it depends on the lender and their property manager or the Columbus real estate agent listing the home. Many banks will turn on the utilities, if requested by the buyer. However, it will depend on the listing realtor or property manager to handle the details. We found that some of them are not very motivated to do it. To turn on the gas or water, the utility company needs to get inside the house. Somebody has to wait for them at the house to give them access. As they don’t give you an exact time, only a 3 hour window, you may waste half a day waiting at a vacant house for the utility company to show up.
- HUD Homes: For these properties you need a special permission from HUD to turn on the utilities for your inspection. Gas and electric are less of a problem, however, they may not allow you to turn on the water, if their property condition report states that the plumbing will not hold water.
What should you do, if you are not allowed to turn on the water or any other utility service?
The key here is to know, if your lender will underwrite a mortgage without all utilities turned on. You need to ask this question when you apply for a loan, even before you make an offer. An experienced Columbus real estate agent and loan officer should know how to handle the utility question or even help you get the utilities turned on.
Many contracts on distressed houses and HUD properties never close, because the utility issues are not addressed at the beginning. They typically come up when the loan is in underwriting a week before the planned closing, and they may kill the deal.
Don’t get yourself into this very frustrating situation! Use the tips in this post and ask the questions right away. I have worked with lenders that will approve mortgages without all utilities turned on. I am specializing in HUD homes and know exactly how to get the utilities turned on, so there’s one less thing for you to worry about!
Thanks for reading the OhioPrettyHomes.com Blog!
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Real Estate Agent helping First Time Buyers.
(614) 975-9650
About the Author
Susanne has sold more than 200 homes in 2011 and is consistently ranked among the top 1% of real estate agents in Central Ohio. Connect with her on Google+ or call her at (614) 975-9650.
{ 5 comments… read them below or add one }
your infomation on utilitie’s, who’s is responsible ? was very good!! I have been wondering about this very thing, exspecally with HUD homes.
thanks again!
Craig Mehl
I am set to close on a hud property on may 14th. no one has said anything about turning on the utilities. we declined inspection and appraisal went through ok. I took it upon myself to make sure utilites are in our name right after closing. is there someone else to contact. my realtor, is very aggressive and on top of everything. but can never seem to get any cooperation from hud regarding info or questions. do you foresee any problems with closing on this date
Hi Lisa, congratulations on your pending contract! Since your appraisal went through ok without having to turn on utilites there is nothing else for you to do other than switching them into your name effective with your closing date. Make sure to check if there is a delinquent sewer fee and ask the seller (HUD) to pay for the charges if applicable.
Hi,
My husband and I are set to close on a HUD home the end of May, but found out today HUD will turn on all of the utilities except for the water. The water will be turned on once we sign and the house is in our name. This seems a little fishy and suspicious… what if there is some major plumbing problem with the house we don’t know about and ends up us having to pay for it? Is there any way to get around the rule of “not turning on the water?”
Thanks!
Chelsea,
As a general rule, HUD does not turn on any utilities. Your real estate agent can send a utility activation request to the field service manager (the company that is responsible for maintaining the property). The instructions on how to do this and where to send the request to come with your contract package. They are different for each of the field service managers.
If the property condition report says that the plumbing will not hold pressure, then HUD won’t allow you to turn on the water. Obviously, this means that there is a leak somewhere in the pipes.
If you can’t turn on the water, you can always hire a plumber to do a pressure test. Essentially, the plumber will determine, if the pipes hold a certain pressure. If they don’t, the plumber may be able to locate the place where the plumbing leaks. Unfortunately, you are not allowed to repair that leak before the closing.
Feel free to contact me, if you have any other questions!