Sacramento Real Estate Blog

This is the last part in a three part series. It seems like often home buyers who don’t have much experience purchasing or selling houses are not aware of how things really proceed in a real estate transaction. Sometimes even if they have been active in the market in the past, laws and rules change and keeping up with them as a consumer is hard. TV shows like the ones we see on HGTV don’t help either, because every state is different and sometimes there are different conventions within the same state across counties. All of this creates a sometimes confusing environment for home buyers.

Here I wanted to go over a few of the main issues that come up during and after escrows so you are more informed as a home buyer. So far, we have discussed the “as-is, where-is” clause, disclosures, inspections, flood insurance, keys and buyer’s remorse. Today, I want to go over some things that would occur after escrow closes or very close to the end of the escrow.

Buying a Home as an Individual when Married

This comes up about as often as once every three to four transactions. Sometimes the client is investing in a flip and does not want to include the marriage partner in the risk involved to his or her credit. Other times, a parent wants to buy a home for his or her children and does not want to include the other. Whatever the reason, it is important that you know that if you are married, the title company will want to get the spouse to either be on the title of the home or they will want the spouse to give up all claim to the house by signing an interspousal deed before the main purchaser signs the main document taking title.

Most home buyers are a little confused by this and are confused when asked if they are married. However, there is a reason for this. California is a community property state, which means all assets and liabilities are shared equally between spouses. Thus when one spouse acquires a house half of it belongs to the other unless expressly signed off. So, even if only one spouse will be buying a home as a sole and separate property, both signatures are required at the notary. It is a good idea for both spouses to make the time to be there. In the past, I’ve had the spouses sign at different notaries and it always creates confusion and leads to closing delays.

Home Warranties are not Perfect

Lately, home warranties are a good way for home sellers to attract buyers. The idea is that the seller pays for a home warranty and if something in the home needs repair, the dishwasher, for example, the warranty company sends someone to repair it for a low fee - currently around $50. You can also add roof coverage or air-conditioning coverage to the home warranty and it is typically paid for a year. You can also extend it after the first year by paying for it yourself.

A home warranty is a pretty good thing for home buyers to have, especially if the seller has paid for it. A home warranty covers unexpected expenses, especially at a time when new home buyers need them most - when they are dealing with a new mortgage and getting used to homeownership. However, there are certain exceptions to home warranties that you should be aware of. For one thing, you should know that they do not cover outside plumbing. Read the home warranty exclusions before relying on them completely to avoid unpleasant surprises.

Taxes

This one gets almost all new home buyers. Even if you have created a reserve in your impound account for all the year’s taxes, you will still get a supplemental tax bill for the year. This is because there is a gap between the taxes the earlier home owner paid (based on home prices when they bought the home) and the taxes you will owe (based on the price of the home when you bought it.) So don’t be surprised if it is a hefty one. Depending on when you buy the home, you can receive one or two supplementalt tax bills. It is a good idea to keep some cash in reserve for this supplemental bill.

However, be sure to check the year on the tax bill. Even if you are sure it is a supplemental bill, ensure the year. With the amount of foreclosures on the market, tax bills missed by the earlier home owners can mistakenly become part of your liability if you don’t check the date. The title company is your best friend regarding this, so hang on to the title company’s phone number and the title officer’s name.

As if that wasn’t enough, another thing that can go wrong with your property taxes is that the mortgage company might just return your reserves months before your annual (not supplemental) taxes come due. They might see it as an excess in their audit, but hold on to that money and do not spend it! You’ll be glad come tax time.

I think that about covers it. These are the most common pitfalls home buyers seem to run into on a regular basis. As the risk of using a cliche, forewarned is forearmed, so be aware of these when you decide to buy a home and ask your Realtor® questions! Questions don’t bother us. Believe me.