Dear Claire, Deal Breakers for Homebuyers
There are lots of thing that can go wrong when finalizing a transaction and we’re here to make sure that those thing go right. We’re going to discuss the things that we focus on for due diligence, and also discuss the things that are found under the rocks.
Once we get the property that you’re interested in purchasing into contract we’re going to do a bunch of inspections. And in those inspections there are always going to be a bunch of things that are wrong with the property – that’s just the way it goes. As examples there could be a buried oil tank, maybe a high radon levels (which causes lung cancer that needs to be mitigated), maybe it’s a roof that leaks, or a chimney that leaks because it doesn’t have a cap, etc. All of these things have different prices attached with fixing them. Some of them are going to be easy to fix and some of them are going to be more difficult. In every case, there’s the issue as to whether the two parties can agree on the solution is usually the problem. If we’ve discovered a leaking oil tank, and it costs $3,500, to fix it, you can work out who’s going pay for it and get it done.
The typical deal breaker is actually timing and that’s one that’s much harder to fix. The harder thing to figure out is something like I need to be in my house until the end of June because I’ve got to stay at home with my kids and I need a place to live. While the other party has just moved here they need to move in at the end of May. Those are harder things to actually resolve because that’s a situation where there might not be a solution. So timing is a big one and it’s a harder one to fix.
Job loss, especially now with COVID, is an unfortunate reality for a lot of people. If you lose your job, and you can’t find another job in the time period that it takes to close on your new home, you can get out of the transaction and get your earnest money back.
The title report is another weird one. So in the world of real estate, I can attach a lien to the house and it primarily goes with the house, not with the person. So for instance, you might find that someone has back child support against the home. When you go to buy the house, there’s a million dollars worth of back child support that needs to be paid. Due to the high amount it’s probably not going to happen. So that would definitely be a situation where we wouldn’t be able to figure out a solution.
By the way, all the things I’m telling you are real life examples I’ve come across. I actually opened an email one day and someone owed a million dollars and it needed to be paid.
The five due diligence steps that we typically always do on properties are reviewing the title report, home inspection, the loan financing, the appraisal, and the sellers property disclosures. In all of those instances, if there’s something wrong hopefully there are solutions that we can figure it out. If we can’t come up with a solution related to the five steps, we can get out of the deal and get your earnest money back. It can be sad and frustrating, but that you don’t lose your earnest money and you can move on with your life
I hope you guys are all staying sane with being home. Tune in next week. Also, comment below if you have anything you’d like me to put in a future Dear Claire’s. Go to our YouTube channel and you will see more information there. I hope you’re well and I’ll talk to you soon.