Nine Things Home Buyers Should Not Do ...
Before Closing on Their New Home

Once you’ve chosen your home and have your loan pre-approved, you’d think it’s a sure thing… But that’s not quite true. The reality is, until the keys are in your hand and you’ve signed the deed to be recorded, there are still steps to take before the house is yours. You can actually lose the home, and any money invested in inspections, appraisals and possibly your earnest money, if you take a misstep.

It’s actually fairly easy to stay on track, if you follow these common-sense guidelines:

1. Do not change your credit rating by making a major purchase or opening a new line of credit. Once you have filed for your loan, put off buying a new car, getting another credit card, buying new furniture or raising your existing credit card debt up to its limit or higher. Once you close on the house, and it’s a done deal, THEN you can consider that new couch and love seat or SUV! If you increase your debt to income ratio, it could raise your interest rate or disqualify you for the loan all together.  Additionally, if you have set aside cash for a down payment, don’t use it for anything other than the purchase of the home. Spending your cash changes your credit worthiness, as well. If you must make a major purchase, talk with your lender to discuss a strategy that will enable you to continue with your home closing. Otherwise, just say no and don’t do it!

2. Wait until after your closing before you change jobs, particularly if you will be switching fields. Even if you hate your boss, stick it out. It won’t be forever, and your final revenge can be that you stayed because it was to your benefit! Again, talk with your lender if this potential exists. Absolutely disclose if you’ve been fired, immediately. Final verifications will be done up to the actual day of closing, including pay stubs and phone calls, so there’s no point in trying to hide the fact. It may be possible to extend the closing while you obtain another job, or cancel the contract immediately and retain your earnest money.

3. Never give earnest money directly to a Seller, always have it placed with an attorney in a trust account. By working with a professional Realtor®, this detail will be handled for you, but if you’re buying directly from a seller, never hand them the earnest money check. You should stipulate in your contract where the money will be held in trust, and provide proof that the funds were delivered as agreed.

4. Expect imperfection in home inspections/appraisals. No home is perfect, and older homes have lots of character! The purpose of the home inspection is to allow you to gather more information about the current condition of the home, how well they systems work (heat/air, plumbing, roof, electrical, insulation, termite activity, etc.) and recommended immediate repairs and potential deferred maintenance. Don’t let a seller’s refusal to do a small repair sour you on the home, but certainly don’t agree to take a home regardless of condition. Repairs are negotiable, and if the repair is significant, most sellers will do what’s reasonable, or will consider concessions on price. In many cases, they don’t realize the need for the repair, and your inspection is their first notice of it.

Appraisals sometimes come in low… Don’t panic! Allow your agent to step in and discuss the situation with the lender to correct the problem. If your buyer’s agent is competent and professional, and has done their homework of checking comparable sales in the neighborhood, this is very unlikely. It can happen in new  construction neighborhoods or with historic homes if there haven’t been any comparable sales in the past year, in particular.

5. Don’t forget the little stuff! You professional buyer agent should remind you to switch over utilities into your name, to establish phone or cable if desired, and to obtain property insurance (you will not be able to close without it.) Verify as soon as your property is under contract the transfer or deposit costs on these items, so you can budget for them. It is fairly typical to have your insurance premium included in your closing costs (which can be negotiated for the seller to pay on your behalf), but verify this so you are not caught short.

6. Even if you meet the Seller, don’t become their best friend! Do not discuss changes you plan to make, talk about your agents, the contract, or any details of the negotiation. In fact, it is best if you NEVER visit the property without your agent present. Why? Believe it or not, it’s possible that during the home inspection, you’ll discover some expensive repairs that need to be addressed. You’ll feel less guilty or uncomfortable if you haven’t chatted for hours over coffee. It’s easy for these negotiations to break down, so keeping some distance and professionalism is best. Your buyer’s agent is there as a buffer for you.

7. Don’t Do it On Your Own. Of course, we recommend that you utilize a Buyer’s Agent who will walk you through all the steps involved to purchase a home. This can enable you to relax and enjoy the process, without worrying about missing details or incorrectly negotiating your purchase.

8. Always do a final walk-through the day of closing (or night before.)  Make sure the house is still standing, that the appliances agreed to are in their proper spots, that the home has been cleaned and all debris removed, that a section of floor isn’t missing (i.e.: it was covered by furniture and rugs, but now is exposed.) Light fixtures, plants and trees, cabinets, door knobs and cabinet knobs, sinks, toilets, storage buildings and more, have been known to mysteriously disappear just before closing!

9. Don’t ignore the locks and security of your new home. Plan to bring new locksets to the property directly after closing and install them, even if the sellers are wonderful and tell you no one else has keys. (You can also remove the existing locksets and take them to Home Depot or Lowe’s to be re-keyed at $5 per lock.) You never know who might have copies of the keys, who aren’t so wonderful. Better safe than sorry! If you are going to install an alarm, arrange in advance for the installation the day after closing, if possible.

We have lots more of advice, but this can give you an idea of the kinds of things to look out for as you head for home ownership. If you have more questions, or want to talk about the process further, feel free to use our ‘contact us’ button to reach us.

Happy house hunting!

Sher, Robyn and Crystal