BUYING YOUR FIRST HOME IS AN EMOTIONAL EXPERIENCE. You will absolutely run the entire gamut of emotions, from excitement at finding the perfect house to stress when putting together your paperwork. There may be worries—are you prepared for the financial responsibility? What if something goes wrong? A good Realtor® is there to help you through every step of the way, helping to ensure that the process runs as smoothly as possible. Always remember, though, that you should educate yourself as much as possible so you know what is happening during the course of your home purchase. And sometimes there are things that can go wrong. Here are a few red flags that you should be looking for.
1. A Seller Contingency. You may find that a seller is waiting on the sale of their current home to be able to finance their new home. Be very cautious about this, and make sure you have a very firm timeline and specifics if you proceed with the purchase. Get *everything* in writing, and include the following:
· What is the Seller’s timeline? (i.e., have they made an offer?) If so:
o Are they currently under contract? How long is their escrow period?
o How far along are they? Have they done inspections already, have they lifted their contingencies?
· If they are not currently under contract, what’s the plan?
o Will they be giving possession at closing, regardless?
o Have they identified any homes or submitted any offers?
· Do they plan to move out prior to the end of your escrow period? If not:
o Are they open to a lease-back option?
If the Sellers are not under contract, you definitely want to pin them down to a timeline. It’s reasonable to put a little pressure on them to find a new home early in your escrow period so you can avoid delays and close in a reasonable timeframe. And always, ALWAYS make sure you get everything in writing!
FOR EXAMPLE: You have settled on a typical escrow period of sixty (60) days. If they don’t make an offer on a house until forty-five (45) days into your escrow, they won’t close before your escrow period is up. That means they will need to ask you for an extension. And two months in, you’ll probably want to agree to the extension—you’ve already invested this much into your dream house, right? But that means another two months for their escrow period to close, which means you are now four months out from moving in. That can be a real problem depending on your current living situation; you may also incur financial penalties if you need to extend your rate lock for your loan.
2. Seller Conflict of Interest. Buying a home should be a business transaction, and each party should be represented by someone whose job is to help them get the best deal, i.e. a Buyer/Seller Agent or Listing Agent. If you find the Seller’s real estate agent is a business partner, family member, or close friend, you might want to be wary. Emotions can run high, and the agent may have difficulty negotiating fairly and professionally, rather than from a personal feeling.
3. Seller’s Disclosures seem incomplete. It varies from state to state, but Sellers should at a minimum disclose:
· History of any and all major construction repairs
· Leaks, water damage, or flooding
· Environmental hazards
· Termite bond
· Foundation/structural issues
· Age of roof, appliances, hot water heater and HVAC
· Presence of polybutylene plumbing
· Faulty appliances, plumbing and electrical issues
· Items that will remain in the home
If they aren’t being forthcoming with documents, or seem insistent on you accepting a document, don’t be pressured into anything. You can check public records, if any, to see if maybe there is something about the house they are avoiding telling you.
Sellers should also disclose any and all paperwork involving an HOA. If they claim that it’s not a big deal, or that there is sort of an HOA but it’s informal, that is a *HUGE* red flag! The last thing in the world you want is to move into a home and then discover the HOA is a nightmare. Check with the neighbors, if you can. See if they are good with the HOA, or if they represent it differently than the Seller does. It is up to the buyer during the due diligence period to request a copy of the Covenants, Conditions, and Restrictions (CCR) which governs the HOA to make sure that they are acceptable to the Buyer.
When you choose your local Pooler Home Inspector, make sure that they are trustworthy and thorough. They should be looking out for you, and may be able to point out things that you might have missed—which will help you negotiate a fair price with the Seller.
4. The Seller or their Agent Are Inflexible. It’s called negotiating for a reason; both sides should be reasonable and work toward a compromise that works for everyone. If you offer to shorten escrow to thirty (30) days instead of 60 to help the Sellers out, they should work with you to schedule your inspections and appraisals. If you put in an offer below asking, be reasonable and consider that they may reject some of your requested repairs.
If you find that they aren’t willing to work with you or compromise, you really might want to reconsider. A house purchase should be professional, and cordial. If it’s “my way or the highway” and you find that you are having to do all the compromising, really weigh your options before lifting your contingencies. Difficult sellers can make the home buying process much more stressful than it needs to be, and when it comes down to it it’s YOUR money, and will be YOUR home. You should be happy with what you are getting for it.
5. The Contract Isn’t Standard. While every house sale contains individual aspects, most real estate transactions are pretty boilerplate. If they are requesting multiple addendums or modifying a standard sales contract, take some time to look at what they are doing. What are they trying to accomplish that isn’t taken care of by the standard contract? Are they trying to build in loopholes, and if so, why? Your real estate agent should be able to tell you if something is an unusual request, but either way if the Seller is changing the documents, make sure you have them reviewed by a real estate attorney prior to signing anything.
Buying a house is going to be stressful even when it’s a dream transaction and everything runs smoothly. Trust your instincts, and listen to your agent. If a Seller is overeager to close but claims they don’t have important paperwork, that’s a sure sign of trouble, and you don’t need it!
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