It is amazing consumers don’t protect their interests more when buying a home. This home will probably be the largest purchase you ever make. Spend the time and extra money to ensure your rights are protected and the home you’re purchasing is worth it. Buyers must vigorously research (due diligence) before jumping into a home sale. This includes talking to the neighbors, asking questions such as ‘have you seen any repair trucks lately’? Are you aware of any flooding - any other issues?

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Colorado is currently one of the ‘hottest’ real estate markets in the country. Many buyers, in a desperate attempt to buy are waiving home inspections in order to close the deal.  Buying a home without an inspection is a horrible risk for any buyer. You may end up needing a new roof, remediation of asbestos or methamphetamines (costing as much as $50,000), leaking, cracked or faulty foundations, termites or other infestations, mold or costly electrical or plumbing repairs.

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Don’t rely on the seller’s pre-existing home inspection report, spend the money and have your own inspection done.  Do your own inspection too.  One home disclosure had a disclaimer ‘we saw a mouse’. After purchasing the home, the homebuyer saw blue dust around the home. It turned out, there was a terrible mouse infestation and the blue dust was poison. 

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Check the internet too. Nowadays you can find out all kinds of things about a property. There are police reports (any murders, deaths or drug raids on the home?), newspaper stories (neighborhood flooding, mud slide, a haunting) or dig a little further about the neighborhood. You may find something like free concerts are held in a nearby park blocking and trashing all the streets including your driveway every month. 

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If you’ve found the home of your dreams and have a closing date, make sure you have the funds available for the closing as far in advance as possible. Many buyers think because they have a ‘pre-approval’ from a lender they’re all set. A pre-approved loan does not ensure the lender will approve your loan. The lender may look at an appraisal and determine the house isn’t worth it, and cancel the loan. This can leave the buyer in a frantic look for another loan, or having to borrow or transfer funds.

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The transfer of funds from one account to another can be time-consuming. It may take 15 business days for a transfer to be complete. Asking the seller for a closing date extension may cost you more - or cost you the sale of the house.  If you don’t have your money available at the time of closing, you could be in default and forfeit any earnest money and/or face a lawsuit for breaking your contract.

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The latest and most damaging scam is the buyer receiving a last-minute instruction to wire the funds for a closing. Realtors and banks are hacked constantly. These hackers are emailing the buyer with wiring instructions for the exact amount needed for the closing. Typically, this is the down payment or closing costs in the tens of thousands of dollars. The buyer, unaware this is a scam, will wire the money without checking first with the realtor, buyer and/or bank. Once the money is wired - it’s gone.  

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A realtor is not an attorney - a realtor can’t give you legal advice. Consider retaining a qualified and experienced real estate attorney. Or, even better, hire a realtor that is also a licensed real estate attorney. Your attorney will be there representing you throughout negotiations, can review the purchase contract and real estate documents (relating to your title, mortgage and taxes). Your real estate attorney is there to protect you from hidden liabilities, deal with any issues that may arise, can register your legal documents, attend the closing, address your questions and make sure you possess the valid ownership documentation for your home. Your real estate attorney is there to protect your interests, not the interests of a realtor or seller. 

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Making sure you can afford your home seems obvious, however, many lenders may qualify you for more than you can actually pay. Set your own budget - don’t rely on a lender to do that. A basic rule is to limit your mortgage payments (including tax and insurance) to 25% or less of your monthly take home pay. This will allow you to pay your utilities, any HOA fees, maintenance and repairs, buy new furniture and other items for your home. It will also allow you to save for other goals such as retirement, vacations and family. It’s also a good idea to save 3 to 6 months of expenses in case you’re hit with a major disaster or emergency.

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You may be living in this home for the rest of your life. Make sure this investment is the best investment you’ll make.