WHAT SHOULD I DO BEFORE I CLOSE?

After you and the seller agree on the price and other terms of the transaction, you're one step closer to the home stretch (although not quite there yet). You still have to close the deal, but before you do, there a few other items to take care of to protect yourself from ending up in a bad situation.

Get a Home Inspection

Once your contract permits you to have the home inspected (via the inspection contingency), you should do just that. Hire professionals to have the property inspected, and hire those that have been qualified by a trustworthy organization such as the American Society of Home Inspectors (ASHI).
While you don't need a licensed professional to point out water stains on the ceiling or cracks in the wall, he or she will notice many things you aren't trained to see. An inspector will notify you of two types of defects, those that are hidden (and usually more costly, such as faulty wiring) and those that are easier to spot.
The inspector will both write down and voice the problems that he or she sees. The oral part of the inspection is typically more informative. It allows you to ask questions, get advice on how to correct a problem, and learn estimates of how much a problem will cost to fix.

Types of Inspections

The types of inspections you should get will vary based on factors such as your location and how and when the building was constructed.
Three common types of inspections are:
  • Interior-and exterior-components inspection: This is a complete inspection of the home's interior and exterior that covers plumbing, electrical work, insulation, foundation, and more. It typically takes several hours to complete and is required for all properties.
  • Pest-control inspection: This version checks for damages caused by wood-destroying insects (termites, carpenter ants, powder-post beetles) and organisms such as fungi. It's primarily for homes made of wood or wood and stucco, but advisable for all properties.
  • Architect or general contractor's inspection: If you're buying a fixer-upper or planning a major renovation, you'll need an architect or contractor to inspect the property. He or she will make sure it's legally and structurally possible.
Also consider having the property inspected for the most common toxic substances found in homes today:
  • Radon
  • Asbestos
  • Mold
  • Lead paint
  • Lead in water
Remember:
Inspections aren't cheap--each one can cost anywhere from a couple hundred dollars to $500 or $600, and as the buyer you should be financially prepared to cover these costs. The high price tag is worth it though, because an inspection could save you from buying a home with thousands of dollars worth of hidden structural damages.

Movoto's Buyer Tip:

It's perfectly acceptable for you to give the inspector a copy of the seller's disclosures (problems the seller has disclosed to you) and ask him or her to check out those issues. It's likely that he or she will do their best to answer your inquiry.

Inspect Your Inspector

To find a qualified inspector, ask your broker for suggestions and browse the internet to find someone with good reviews. Interview multiple candidates and ask them for references of other inspections they've recently done.
Here are a few suggestions to ask inspectors:
  • How long has your company been in business for? You want someone who's experienced and is familiar with the industry.
  • How many inspections have you personally performed in each of the last few years? An active inspector should conduct at least a couple hundred inspections per year.
  • Does your company have errors-and-omissions insurance? Errors-and-omissions insurance can help cover an expensive error that the property inspection fails to find.
  • Do you have any special licenses or certifications? An inspector will often have a background in a related field such as construction or engineering, which means they'll have unique insights to add to the inspection.
  • What type of report will I receive? You want a report that's written--because verbal ones are useless for formal purposes--but you also need one that you can understand. Ideally you want an inspector whose writing is easily understandable and detailed.
Ask as many questions as you need to in order to feel secure with the inspector you choose. You don't want to end up spending hundreds of dollars on a fraudulent inspector or one who isn't knowledgeable about the field. As confident as you may be in your ability to spot issues in the home, this is one cost not to skimp on.

Should You Tag Along?

Of course you should go along on the home inspection (provided you don't get in the way of the inspector doing his or her job). It is going to be your home, after all. You probably want to know what condition it's in and what problems exist.

What to Do With the Inspection Results

Don't immediately try to cancel the contract if your inspection report shows up with some problems. Remember that it's the job of the inspector to point out all problems, no matter how small, and chances are your house will have at least a few minor issues. No home is perfect.
Once you see the results, there are two things you should ask yourself about the problems in question:
1.Can the problem be fixed?
2.At what cost could the issue be fixed?
Most things are fixable, including many types of earthquake damages. Yet non-fixable problems do exist: The house could sit on a fault line or the foundation might have extensive damages, to name a few.
You must decide whether the problems pointed out have easy fixes or would cost you more than you feel is reasonable. Based on that decision, you can withdraw from the contact or attempt to renegotiate the price based on the expected cost of repair.

If the Seller Misrepresented the Home's Condition

If the Seller Misrepresented the Home's Condition
If the results of the inspection yield a major misrepresentation of the property on the seller's behalf, a well-written inspection contingency should let you withdraw from the deal. You can also report the broker's conduct to your state agency that regulates real estate professionals.
If you find out that the property's condition was misrepresented after you close, you can take the seller or broker to court. This is only a smart idea if you have physical (read written) proof that they knew about the problem or should have known about it, and even then it will still cost you time and resources.

Movoto's Buyer Tip:

If you find out that the property's condition was misrepresented after you close, you can take the seller or broker to court. This is only a smart idea if you have physical (read written) proof that they knew about the problem or should have known about it, and even then it will still cost you time and resources.

Complete the Final Walk-Through

If your contract permits you a final walk-through (which you want to have), check out the property one final time before officially closing the deal. It might seem like overkill after the inspection, but you want to make sure the home is in the same condition you last saw it and therefore expect it to be in.
You should understand that the walk-through is not your chance to backtrack and request new terms to the agreement or haggle over small but fixable problems with the property. Rather, it's your opportunity to check that the house looks the same as when you first made your offer.
During the final walk-through, don't get hung up on scuff marks or other minor damage that likely occurred when the seller was moving out (if he or she moved out after you first saw the home). Instead, look for:
  • Holes in the wall or broken plaster
  • Broken windows
  • Appliances that don't work properly
  • Plumbing problems
  • Electrical system defects
  • Faulty air conditioning unit, water heater, or gas heater
  • Extensive gashes that will require a replacement floor
  • New carpet damage, including dog urination (which is nearly impossible to remove unless the whole carpet is replaced)
  • Any other major damages or changes
CHAPTER 10

Sources:

Tips & Traps When Buying a Home: 4th Edition, by Robert Irwin
Home Buying Guide for Dummies: 3rd Edition, by Ray Brown and Eric Tyson
100 Questions Every First-Time Home Buyer Should Ask, by Ilyce R. Glink