I know there's another Sims 2 thread, but I thought this issue deserved special attention.
It has recently been discovered by the mod community that many hacked objects and modified code are spreading to people who never downloaded them. The problem is that Maxis, in their infinite wisdom, decided that whenever a house was packaged it would package all custom objects with it. When you download a house, you currently have no way of knowing custom objects are included.
So you say, "That's OK. If this house has the Toilet of Electrocution, I just won't buy it for any of my other houses." Unfortunately, it's turned out to be more complicated that that.
There are invisible controller objects on every lot, such as the car portal or the social worker controller. One recent mod was the "No Welfare" mod, which prevented social workers from coming to take your kids. It modified the social worker controller. What none of the mods realized was that if you install the NW mod, then you package and upload a house somewhere, the modified social worker controller goes with it. Once someone downloads it, they suddenly discover they have no social workers on ANY of their properties, because the basic social worker controller has been modified. So the NW mod (and others) have been spreading without the knowledge (or intent) of the creators or the downloaders.
Of course, the REAL problem is that some smart-ass is going to write something that uses one of these controllers to do something like cause all the sims in the house to burst into flame and die at noon every Tuesday, then upload a bunch of houses. Not only that, but even if you realize there is some unwanted code it's hard to remove because of another "interesting" programming decision. Anything that gets placed in the Downloads folder will be replicated by the game into other package files (like possibly Neighborhood Manager.package) in a manner the mod community is currently investigating. That means if you delete a mod from your Downloads folder, sometimes it won't go away since the game has created another copy and buried it somewhere.
The decision to package custom content with houses was well-intended, but with the benefit of hindsight it was also foolish. The decision to replicate downloads was IMHO just damn stupid. It defeats the purpose of having a downloads folder.
So until Maxis (or, more likely, the mod community) comes up with a way around these issues, I'd strongly suggest avoiding downloading houses from any source. I'd also be VERY careful about the mods you install (which, to be fair, is good advice anyhow). Other downloads, such as clothing, should be fine and I *think* genetics (skin, eyes, hair) are fine, though genetics packages contain more than just textures so I'm not 100% on that.
And, as always, backup backup backup. I backup the My Documents/EA Games folder every time I play, and keep several consecutive backups since I tend to play around with mods a lot.
There's a thread discussing this here
PS And, before you ask, there is no such object as the Toilet of Electrocution. Yet...