Buying a house takes time, patience, and careful planning. But because this process has so many moving parts, sometimes buyers miss crucial steps—and it can cost them big-time.
To help clue you in to these oft-overlooked tasks, we asked real estate experts to reveal some of the more surprising home-buying moves you may not realize you have to do. Keep these actions on your radar so you don’t miss out on your dream home for a dumb reason that could have been nipped in the bud, had you only known it was part of the deal.
1. Scrutinizing property disclosures
Typically, after a seller has accepted your offer, he provides you with a property disclosure statement, says Atlanta real estate agent Bill Golden. This statement essentially outlines any flaws that the home sellers (and their real estate agents) are aware of that could negatively affect the home’s value. These statements are required by law in most areas of the country, so buyers can know a property’s good and bad points before they close the deal.
Unfortunately, because home buyers receive so much paperwork, it’s easy to overlook what’s in the property disclosures, says Seth Lejeune, a real estate agent with Berkshire Hathaway in Collegeville, PA. Still, you should know whether there are any pre-existing issues with the house that you’re buying.
How to do it: Sit down with your real estate agent, and read through the property disclosures together. Look for major issues such as a faulty foundation, leaky roof, HVAC problems, or pest or mold infestations.
If you spot something on a disclosure statement that you don’t understand or that raises concerns, have your real estate agent bring it up with the listing agent. The seller might have an explanation that puts you at ease (e.g., “We had bedbugs back in 2012 but hired an exterminator and have been clear ever since”).
But if the issue makes you seriously question whether you want to move forward, this could be an opportunity to renegotiate the sales price to compensate for the added risk you’re taking on buying this home.
2. Acquiring title insurance
When you buy a home, you “take title” to the property and establish legal ownership—confirmed by local public land records. As part of the closing process, your lender will require a title search, and you’ll need to purchase title insurance that covers your property.
There are two types of title insurance: lender’s and owner’s. The lender’s title insurance protects your lender alone, and is typically required if you get a mortgage. The owner’s title insurance protects your financial stake in the home against fraudulent ownership claims. Owner’s title insurance is optional but recommended, because lender’s title insurance won’t protect you personally if the insurance company loses a battle over legal title. So, without owner’s title insurance, you’d be required to pay for the continued fight over the title and could lose your investment in the property.
How to do it: Unlike other types of insurance, title insurance is paid with a single premium at your closing. If you’re buying a resale, you may be eligible for a “reissue” rate, which could offer a substantial discount off the regular premium since the title policy is already in effect, and the title research has already been completed.
In some states, title insurance premiums are the same no matter whom you work with; however, in the majority of states, you can save money by shopping around. Ask your real estate agent, mortgage lender, and friends for recommendations. (Note: Some title companies are affiliated with real estate agencies, which should be disclosed to you.) Once you have a few companies to check, visit their websites to see if they’re transparent about their fees and to review the experience of their staff. Check with the state title insurance administration for a license and the Better Business Bureau before deciding on the title company you want to use.
3. Preparing for the home inspection
Most home buyers make their purchase offer contingent on the results of a home inspection, a close examination of the property for defects by a professional home inspector. But to get the most out of your home inspection, you’ll want to be involved in the process.
How to do it: Before your inspection, look over the interior and exterior of the property for potential problems and areas you would like the inspector to review carefully. For example, they could be the dark spots in the basement or underneath the bathroom sinks that could indicate water damage. Create a written checklist that you can give to your inspector.
You should make sure to attend the inspection yourself to see whatever problems crop up. But know this: Your potential home will have problems. So, don’t panic if your inspector gives a seemingly endless list. Yes, there are times when you should worry, but not every issue is critical, and your inspector will know which problems you should address with the seller. Barring any major renovations needed—such as a new roof or mold removal—your inspector’s visit will simply provide a to-do list that you can tackle one step at a time.
4. Reviewing condo or HOA rules
If you’re looking to buy a home in a community run by a condo board or homeowners association, you’ll have to abide by its restrictive covenants. Also known as CC&Rs (for “covenants, conditions, and restrictions”), restrictive covenants are, in a nutshell, the rules you’ll have to follow if you live in that community, as well as fines for infractions. Given these are the laws you’ll have to abide by, this is required reading that you skip at your own peril.
How to do it: After your offer to buy a home is accepted, you are legally entitled to receive and review the community’s CC&Rs over a certain numbers of days (typically between three and 10). You’ll want to closely review them with your real estate agent.
If you spot anything in the restrictive covenants you absolutely can’t live with, you can bring it up with the HOA or condo board, or back out of your contract completely with your deposit in hand. It may seem extreme, but if this is the place you hope to call home, living with rules that seriously cramp your style may just not be worth the trouble.