The housing market is so hot that desperate buyers are now dropping contingencies and inspections in the hopes of submitting a winning bid.
When 10 people are making offers on the same home, buying it "as is" can make an offer more competitive. But one couple learned why that can be a bad idea, and has a cautionary tale for anyone dropping inspections and other routine home buyer diligence.
Scott and Lorrie Hill recently found their dream home. But to win the house in this competitive market, they purchased it without full "due diligence," a decision that's now costing them a small fortune.
"The risk to buying a home without doing your diligence of protecting yourself is you could end up losing the home," Lorrie Hill cautioned.
More than $100K in repairs, legal fees
The Hills have spent tens of thousands of dollars on repairs, including rebuilding their deck, which was rotting underneath.
"We were OK with that because we loved this house," Lorrie Hill said. "What we didn't expect were the legal fees."
They have paid well over $100,000 in attorney fees so far over a decades-old property line dispute. They were unaware of the dispute until they had signed the contract.
Realtors say buying without inspections or contingencies is especially risky with older homes, where buyers could deal with termites, water damage, or in the Hills' case, long-running property line questions.
"If you don't do an inspection and do a title search, you can end up with huge bills you weren't expecting," Lorrie Hill said.
But realtors Steve and Denise Taylor said many people are doing that in multiple-offer situations, especially when cash offers are involved.
"Especially dealing with multiple offers, many people are waiving inspections," Denise Taylor said. "They are waiving inspections and waiving appraisals."
That's not usually a major risk with a newer home in a newer subdivision, but it can lead to a nightmare scenario with older homes.
How to protect yourself
So you don't let this happen to you. Realtors suggest:
- Working with a licensed realtor throughout the home-buying process.
- Paying a real estate attorney to look over the contract.
- Having a home inspector do a full inspection. Even if you agreed to take the house "as is," if they find a major problem like a sinking foundation or termites, the inspection may still allow you to back out.
- Purchasing title insurance, in case someone else tries to claim part of your land, which may have saved the Hills thousands of dollars in legal fees.
"Get that title insurance; it could help you," Lorrie Hill said.
Lorrie and Scott Hill say they can't even sell their home now, even if they wanted to, until their land dispute is resolved.
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