Buying a home? How to spot hidden defects and avoid costly surprises

When buying a home, people tend to focus on its location and appearance, often paying less attention to its actual condition. "Buyers are more concerned with aesthetics. If they like the curtains, the colour of the flooring and the location, they are ready to go ahead with the purchase. But the technical condition of the property often goes unchecked," says Marko Sults.

Sults has encountered cases where expensive wooden parquet flooring has been laid over an old, uneven subfloor. Over time, the joints between the parquet boards begin to break apart and the floor starts to creak. In the worst cases, the flooring has to be removed and properly reinstalled.

Even a seemingly minor defect in a bathroom can lead to extensive repairs. According to Sults, a loose corner of a tile may indicate that moisture has already penetrated the underlying structures. If the damage requires the bathroom to be completely renovated, the total cost could reach €10,000–15,000. To avoid such surprises, buyers should ask the seller when the bathroom was built or renovated, who carried out the work and what documentation is available.

A property valuation is no substitute for a technical building inspection

According to Karin Ossipova, Head of Home Loans at Coop Pank, anyone buying an existing home should be prepared for at least some additional work and avoid spending all their available funds on the purchase itself. Buyers should also remember that a property valuation report is not designed to provide a detailed assessment of the repairs needed, as its main purpose is to establish the property's market value.

A professional valuer carries out a visual inspection and checks official records. However, valuers are not construction specialists, and their inspections do not reveal what is happening inside the building's structures. Buyers who want a clearer picture of a property's technical condition and potential repair needs should therefore consider commissioning a technical building inspection.

"Having a technical building inspection carried out is in the interests of both the buyer and the seller. It can help prevent serious consequences for both parties if hidden defects are discovered after the sale," says Ossipova.

Plan for renovation costs alongside the purchase

When assessing a home loan application, the bank considers the value of the property offered as collateral, including how easily it could be sold if problems arose. However, the borrower's ability to repay the loan remains the most important factor. The bank therefore first establishes whether the buyer can afford the property and whether the collateral is sufficient to cover the outstanding loan balance.

A property requiring substantial renovation is not necessarily a problem for the bank. However, the buyer is expected to have a clear plan for completing the necessary work and financing it.

Banks do not generally require a technical building inspection. Nevertheless, an inspection report prepared by a construction expert, together with an estimate of the necessary work, can help buyers plan the purchase and renovation together. This gives them a better understanding of whether they will have enough money to complete the work before they commit to the purchase.

It is also worth remembering that a lower purchase price does not necessarily leave the buyer with an equivalent amount to spend on renovation. Even if a seller reduces the price by €10,000 because of identified defects, the buyer may not have an additional €10,000 available for repairs.

As a rule, banks lend up to 85% of the property's appraised market value. However, if the agreed purchase price is lower than the market value, the bank uses the lower figure when calculating the loan amount.

"Buyers will therefore need to use their own savings to cover renovation costs or consider other financing options," explains Ossipova.

Mistakes made when installing a new kitchen can also affect neighbours

Apartments renovated specifically for resale are becoming increasingly popular. They often look attractive and appear to be in excellent condition, but according to Sults, these so-called flipped properties can give buyers a false sense of security. Fresh finishes and a desirable location may be enough to convince someone to buy, without taking a closer look at the extent or quality of the renovation work.

"People often assume that a completely renovated apartment doesn't need to be inspected. In our experience, we usually only get called in after the buyer has lived there for some time and discovered problems they didn't know about when they bought the property," says Sults.

However, changing the layout also means making sure that ventilation, water supply and drainage connections are properly arranged. Sults has seen cases where a kitchen extractor hood has been connected to the wrong ventilation duct, allowing cooking smells to spread into neighbouring apartments.

Make sure alterations are properly documented

If an apartment or house has undergone alterations, it is important to check that the documentation is in order. Sults has come across apartments where significant changes were made without the approval of the apartment association or without being recorded in the Estonian Building Register.

Proper documentation is particularly important when financing a home purchase or renovation. "The bank needs to know that the work will be completed and that the information in the Building Register will be brought up to date. The property also needs to remain marketable if the owner decides to sell it in the future," explains Ossipova.

Since a significant proportion of homes are purchased with bank loans, problems with documentation can considerably narrow the pool of potential buyers. Many people may be unable to obtain financing for such a property, leaving it on the market for an extended period.

If the official records do not match the property's actual condition, the bank may include a requirement in the loan agreement for the discrepancies to be resolved. Buyers should therefore check the information in all relevant registers.

"There are cases where an apartment is registered as a separate property in the Land Register, but no corresponding apartment can be found in the Building Register," says Ossipova.

She also points out that it is not always possible to register existing alterations as they are. In some cases, bringing the documentation into compliance may require physical changes to the property itself, potentially resulting in considerable additional costs.

Check the condition of the building and the apartment association's finances

A freshly renovated apartment may look perfect on the inside, but if the building's roof or façade needs major repairs, problems with the building itself can eventually affect the newly refurbished living spaces.

Particular care is needed when buying an apartment in an older prefabricated concrete building that has not undergone renovation, especially if its external walls have been insulated from the inside. This changes how moisture behaves within the wall structure and can encourage mould to develop behind the interior finishes.

According to Sults, depending on the condition of the façade and roof, signs of mould may become visible within just a few months or take several years to appear.

Beyond the technical condition of the apartment and the building, buyers should also look into how the apartment association is managed and assess its financial situation.

"You need to find out how the apartment association operates, whether it has any debts and whether there are owners with substantial payment arrears. This is another important aspect that shouldn't be overlooked when buying a home," stresses Ossipova.

Buyers should also establish what repairs the building may need and whether the apartment association has any long-term financial commitments related to renovation work.

Before buying a home, it is therefore worth taking the time to understand the property's actual condition and identify any potential additional costs. If necessary, consider involving a construction expert to assess the property. If you plan to finance your purchase with a home loan, you can submit a loan application to Coop Pank or book a home loan consultation to discuss the options for financing both the purchase and any necessary renovation work.