By Damon Poeter
If you’ve ever bought something that didn’t live up to its billing — say, a vacuum cleaner that promptly broke down or a jacket with a zipper that stopped working after a month or two — you know how angry and swindled that can make you feel.
Just imagine how much worse that feeling would be if you wound up with a really expensive dud of a purchase, like a water-damaged car or home.
Yes, you may have found your dream car available at a terrific price or tracked down a wonderful apartment in an ideal location. Nevertheless, it’s always a good idea to investigate the history of what you’re acquiring, especially if you live in or near a region affected by flooding, severe weather, mudslides or other recent damaging events.
If you can afford it, it’s worth the extra expense to have a used car inspected by a professional mechanic. Similarly, if you’re buying a house or condo, you should always have it professionally inspected before signing a deal unless you have been renting the property and are knowledgeable about its condition or are qualified to make such an inspection yourself. Inspections are required to receive a mortgage loan insured by the Federal Housing Administration (FHA). Most mortgage lenders will require an appraisal as well.
“Know when to get help from a trusted expert,” says Sean Scaturro, director of insurance advice and CERTIFIED FINANCIAL PLANNER™ practitioner at USAA. “It’s not a bad thing to ask for help and it could save you money in the long run.”
But what if you’re on a tighter budget and don’t want to spend any more than you have to for a car or truck? Or if you’re in the market for a rental home and don’t have the time or extra means to set up an inspection? It’s still important to look out for water damage. A water-damaged vehicle can break down, pose a higher accident risk or fail inspections you need to legally drive it. A water-damaged house or apartment can be structurally unsafe or pose a health risk due to things like black mold.
If you do wind up with a water-damaged car or residence and would like to sell it, you’ll be obligated to either make potentially costly repairs or reveal the extent of the damages to potential buyers. In order to sell a car that has flood or significant water damage, a salvage title may be required. If you purchased a car that you suspect has been in a flood and was not disclosed to you, you may want to research options for legal recourse. Consequently, you don’t want to be on other end of the issue; trying to sell a car with flood or water damage could create repercussions for you.
Here are some quick tips for detecting water damage in vehicles and residential structures:
Ask the seller about the history of the car.
The seller may be upfront with you if there’s been water damage to the vehicle. If the car had a previous owner, the current seller may not be aware of any such damage. But if the seller has a good idea about the vehicle’s history, you may be able to figure out where the car was driven and when, which might offer clues as to whether it was ever in a flooded area. Keep in mind that vehicles can get water damage from any immersion in water, not just from being caught in a flood.
Ask the seller if you can have a mechanic look at the car.
This is a good thing to do whenever you’re buying a used vehicle because if you get resistance, that’s a red flag. Not just for water damage but for any number of things that might be wrong with the vehicle that the seller doesn’t want you to know about.
Run the VIN to get the vehicle’s history report.
You can find the 17-digit Vehicle Identification Number (VIN) on the driver’s side dashboard, on the driver’s door pillar and on other body panels, as well as in the title and registration papers. Once you’ve got it, plug it into a website like CARFAX, CarProof or AutoCheck for a (paid) individual vehicle history report. Look for instances of reported water damage, keeping an eye out for words like “flood,” “salvage” and “rebuilt.” Badly water-damaged vehicles are usually declared total losses by insurance companies. The trouble is, owners may fix uninsured cars without reporting the damage to anyone, meaning such damage won’t show up on a VIN report.
Look for damage or problems with the vehicle.
If you’re inexperienced with cars, you might not catch evidence of damage that a professional would detect. But here are easy tests to administer that might save you from buying a water-damaged car or truck:
Look for — and smell for — mold and mildew in the car.
• Test the electrical systems — lights, blinkers, radio, clock, climate control, lock and window buttons, dashboard settings, seat adjustment controls, etc. — to make sure everything works.
• Look for corrosion and rust throughout the vehicle (lift mats to inspect the flooring) and engine.
• Look for differences in the paint below and above a certain line on the body, which might be the result of the car sitting in water.
• When you test drive the vehicle, try to detect whether mechanical parts like the brakes or wheel bearings are seizing.
Detecting water damage in residences
Ask the seller or landlord if there’s been water damage to the building.
“It is important to get the information you need about a home’s history; however many people are reluctant to ask when they might be wrong,” Scaturro says. “Don’t be afraid to ask questions that help you make better financial decisions.”
If you’re renting through an agency, get the agency to share their inspection reports.
Landlords and agencies are required to make rental units healthy environments. Agencies have inspectors, and you should ask for assurances that the home you want to rent is safe.
Look for telltale signs of water damage.
Here are some quick tips:
• Check behind and under appliances for mold, mildew and discoloration.
• Look for — and smell for – mold and mildew throughout the residence.
• Keep an eye out for a discoloration line inside and outside the building, which might have been caused by the building being flooded.
• Look for signs that building materials like Sheetrock and siding have been replaced only up to a certain height to which floodwater may have risen.
Ask if you can bring your own inspector in to test the rental.
Again, the response you get to this request can be telling. If you do suspect there may be water damage, strongly consider bringing in an inspector before you rent.
“With water-damaged rentals, there can be serious health concerns. The structure rotting out is going to cost the landlord financially, not you,” he says. “But you still need to be concerned about things like mold, certain types of pests, seepage into water lines you shouldn’t be drinking from, and even floors and ceilings that could fail and hurt you or damage your belongings.”
Want a safer car that drives better and longer? Use our month-to-month vehicle maintenance guide to prevent costly breakdowns and stay safe on the road.
Sean Scaturro is the director of insurance advice for USAA and a CERTIFIED FINANCIAL PLANNER™ practitioner. With more than 15 years of experience in the financial services and insurance industry, Sean has a wealth of knowledge advising clients on risk management, asset allocation, retirement planning, portfolio construction and estate planning.
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