You've taken the time to save-up for a down payment and always pay your bills on time. Long before you applied for a home loan, you carefully and strategically paid-off as much debt as you could, and have been staunch in not opening new lines of credit to keep your debt-to-income ratio low. Then, you saved a little more, building-up an emergency fund and have meticulously gone through your credit reports, disputing every inaccuracy on your files. Eventually, you started shopping around for a mortgage, looking for the best rate and terms.
That's when you settled on one lender and applied for a mortgage. Though prepared, you stayed nervous until the moment you knew you were approved and now you're out looking for a home. There are many you've seen and only a few are really resounding, but one in-particular is your favorite. The moment you saw it and walked inside, you just knew that it was the one you want and now, you're excited to make a purchase offer but are still cautious about making a decision that will invite buyer's remorse.
You want to make a smart and informed choice, not an emotional one that leaves you with many problems to deal with in the future. That certainly is pragmatic; and, it's one which is a good one because by making an offer on the home, you're entering into a legal agreement that can become complicated and long-lasting.
Understanding the Reality of a Purchase OfferWhen you find a home you really like and make an offer to buy it from the seller, you are committing to a legal obligation. In practically every purchase agreement, there are stipulations which give you the ability to walk away from the deal. However, the seller has legal rights too, and there are also legal remedies for the homeowner. For instance, if you do not go through with the transaction, you might lose your earnest money deposit.
"Before you make an offer on a house, it pays to ask a handful of questions. While the answers might scare you off or make you rethink your bid, they could make you feel more confident that you're making the right move on the right house." --Bankrate.com
Should you outright breach the agreement, you might find yourself named as a defendant in a civil lawsuit with the seller as the plaintiff. The homeowner will probably use the "specific performance" clause to compel you through the court system to buy the house, even if you don't want to purchase it. You read that right, courts have actually made buyers purchase a home.
How to Research a Home before You Commit to Buy
To save yourself from a boatload of buyer's remorse, keep your sanity intact, and avoid costing you money, do a little due diligence on your own. Though most states require sellers to make full disclosures, some will withhold valuable information. Here are some super sleuth techniques:
- Ask neighbors about the home. Approach neighbors and inquire about not only the neighborhood itself, but also about the owners and ask if there's been any problems or updates. You'll likely be surprised by how much you'll learn.
- Visit the local code enforcement agency. Go online or to the office and search the home's address. If there's no record of a building permit, yet the home has a completely updated kitchen or bath, that's a bad sign.
- Check court records. The clerk of the court is another great resource. Search the database of public records using the address and the current owners' names. You might come across a lien on the property, which is a giant red flag.
- Search newspaper archives. Again using the home's address, search local newspaper archives. You might find some very interesting information about the house itself or something that happened there.
- Consult your home inspector. Ask your home inspector questions about potential future problems that could transpire. You'll also want to ask some future-looking questions of your pest inspector.
- Speak with your insurance agent. You might find a hefty price tag comes with owning the home to cover things like flood insurance.
- Look into the HOA carefully. If the home is under an association, that usually means some nice amenities. It also means there's money to be managed by said association. You could very well discover there are underfunded reserves and you'll be the one hit with the cost of a special assessment when the seller is out of the picture.