There is one thing that most people don't do, that can cost you dearly, before you sit down to sign the closing paper. Learn from my bad experience.
Introduction
You had the house inspected. Check. You calculated the amount you'll need for repairs. Check. You get all of your paperwork into the title company and the mortgage company. Check. All set to sign the closing papers? Wrong!
What is left to do? You must inspect the house one more time immediately before going to the closing.
What Happened to Me
In July 2008, I made an offer on an investment house that I thought would make a good rental property. I negotiated a deal with the seller where she would pay part of the closing costs. I hired a capable house inspector, who wrote a good report of the property. The closing was delayed a week because the lender asked for more documentation for me. During that week, I did not enter the house again, although I did a few drive bys to keep an eye on it.
After signing the papers on July 18th, I immediately went to the house to start on some repair work. Upon opening the door, I was overwhelmed by a powerful musty/humid smell. The carpet was wet and I heard the splash as I walked across the living room to the wash room. I saw the hot water was leaking and had flooded the house.
Leaking Hot Water Heater Creates Greenhouse Environment
What was worse, with the windows and doors closed, the hot water had created a humid greenhouse environment that was perfect for growing mold! And as I looked around, I could see mold on almost all the walls, from top to bottom.
After a futile effort to try to clean up the mess, I called the agent who represented both myself and the seller. She came over to the house and immediately contacted the title company and the lender to stop the deal. I was fortunate that the closing took place on Friday afternoon because the paperwork wouldn't be filed until Monday morning. The deal was stopped and I got all of my earnest money and down payment back, except the cost of the home appraisal and the inspection.
A Hard Lesson Learned
Had I done the final inspection prior to going to the closing, I could have saved a lot of time & effort.
I have been through many closings and I never did a final walk through before closing. But from now on, I will never fail do it.
As an epilogue, when I went on vacation to Mexico after this episode was over, I made it a point to turn off the gas and water to the hot water heater in my personal residence.
I think I have learned my lesson.
Terry Sprouse is author of the book "Fix 'em Up, Rent 'em Out: How to Start Your Own House Fix-Up and Rental Business in Your Spare Time."
Terry's blog & webpages:
http://www.fixemup.org
http://www.planetabooks.com
Dennis Life
Camera Reviews
Posts
No comments:
Post a Comment