Sacramento Real Estate Blog

This is part two in a series. The last time, we covered things related more closely to REOs or bank-owned homes, since that seems to be what most buyers are picking up lately. While the “as-is, where is” clause, disclosures and inspections are not necessarily specific to bank-owned homes, it is usually in the purchase of one that a home buyer runs across the them. Today, I want to go over three more that most home buyers are not prepared for and are especially shocked at because they appear so late in the escrow transaction.

Flood Insurance

Usually flood insurance is optional. However, I have had escrows where the client gets a quote from his insurance agent and we send over the proof of insurance to escrow, but the net sheet on the day of the signing comes back with a quote for flood insurance as well. What happened? The client thinks there is a mistake and refuses to sign. The lender however believes that flood insurance is required and refuses to remove it from the net sheet, will not have loan documents out without the home getting flood insurance. Who’s right?

Sometimes there really can be an error. Maps of flood hazardous areas are constantly revised and no one can say with any guarantee that a certain area falls within a flood zone. A classic example is Colonial Village. Just five years ago, flood insurance was required in all homes in that neighborhood, but then maps were revised and flood insurance is optional. Home buyers are advised to read their Natural Hazard Disclosure Reports closely. That is where you will find out if the property is in a flood zone. If it does fall into one of the flood zones, the lender will require you to carry flood insurance, just as you are required to carry home insurance. But at the very least, you’ll know during the contingency period, so that there are no surprises the day of the signing, which is pretty nerve-racking already without added stressors.

Keys

If you’ve been watching movies or the property shows on HGTV, you’ve probably got the wrong idea. Almost always, the happy home buying couple signs the documents and the Realtor® or the title officer hands them their keys. The pens are barely capped and put away, the ink isn’t dry and the keys to the new home are exchanged. Well, I have news for you: that almost never happens. Signing documents really is as dreary as it sounds. There will be a stack waiting for you when you get to the title office. You will be warned about what happens if you default on a payment, the details of your loan will be explained to you along with other disclosures and then you get to sign and go home. You don’t receive keys on that day.

After you sign the loan documents, they are taken back to the lender. The lender ensures everything looks right and then the loan is funded. This usually happens the following day. When the loan is funded, the title company is notified and the transfer of title is sent for recording at the county clerk recorder’s office. It is only after the recording confirmation is received that the keys transfer hands. Chances are your Realtor® will meet you at the property and take the key from the lockbox and hand it to you.

Most buyers are surprised that so much has to occur between signing and receiving their keys. It all usually takes no longer than 48 hours. But those can be the longest 48 hours you experience!

Buyer’s Remorse

Yes, Virginia, there really is buyer’s remorse. When it hits, even the most excited first time home buyers have no idea what is wrong. The truth is, there really is nothing wrong. Maybe it’s that the excitement of buying a home is now over. After the hundreds of homes to choose from, there is the one that has been settled on. Maybe it’s that you have just got a huge loan and feel like you have spent a lot of money. Or maybe it’s just the adjustment into a new place. Whatever the reason, buyer’s remorse involves a feeling of sadness or disappointment home buyers often experience after the purchase of a home. Sometimes, it hits during signing, sometimes before signing. Other times, home buyers complain of feeling especially low right after they move into the new home.

One way to overcome buyer’s remorse is to get involved in decorating the home. It also helps to have a housewarming. And definitely cancel all those services where you had new listings emailed to you automatically. Stop looking at new listings around you. Yes, it is a commitment, a little like getting married. Make the most of your new home and stop looking at others.

Hopefully, this helps you the home buyer anticipate some potential problems that could arise if you didn’t know everything about the home buying process. Come back for the last and final part of this series!