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By Tara-Nicholle Nelson, FrontDoor.com | Published: 4/14/2009
Avoid buying a lemon by getting involved in your home inspections: read the reports and ask questions when something is unclear.
In the midnight hour, every homebuyer wakes up at least once to wonder, "is the home I'm buying a lemon?" Many buyers are haunted by visions of their dream home transforming into a shambles immediately after closing, complete with pans collecting roof leak drips, a crumbling foundation and surprise! -- an infestation of wood-gobbling crawlies.
You're not the first buyer to have these real estate nightmares. Fortunately, real estate deals everywhere have some features built in to help you manage the risks of being exposed to catastrophic surprises with your home later on. Once you know what they are, you might just get yourself a few nights of peaceful sleep, even during escrow!
Disclosures. In every state, sellers are required to disclose any property condition or defect that would materially impact a reasonable buyer's decision-making. When you get disclosures, even if there are dozens of pages, read them! Many times, you will learn critical details about the property's history, the neighborhood, and past or needed repairs and upgrades. You may want to ask the sellers for more details, contractor invoices or contact information, or even warranty paperwork, based on what you read in the disclosure documents.
Inspections. In most areas, it is advisable to have at least pest, property and roof inspections conducted at your own cost (check with your Realtor about which inspections make sense in your situation). But don't stop at having the inspections. Attend them and ask questions when something is unclear. You'll get all sorts of details that will not make it into the written reports, and you might also learn how to work all the emergency utility shutoffs! Afterwards, read the reports and follow up on the contents.
Contingencies. After reviewing your disclosures and inspection reports, you might need further inspections by specialists, you might need to renegotiate your agreement with the seller to have some repairs completed or get the price reduced, or you might need to back out of the deal entirely, if the needed repairs are beyond your threshold. In order to have these options for avoiding a lemon, you and your Realtor must be sure to include an inspection contingency in your contract.
Home Warranty. All homes require maintenance over time; smart homeowners minimize the risk of major repair costs by maintaining a home warranty policy that will cover many major malfunctions for a service call fee of $40 or $50. Most of the time, the seller will pay for your first year's home warranty, but it's up to you to maintain it. That'll run you about $350 or so a year, but if your water heater starts leaking or your furnace goes bust, it'll pay for itself several times over with one repair!
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