We closed and I have the keys. Anything else that I should know?

Understanding the Real Estate Process from A – Z – A Buyer’s Guide to Real Estate – Part 14

This is the fourteenth post of a series in an FAQ format that I hope will help would be buyers better understand the real estate process that they are about to go through. There is a follow-on series to the posts for real estate sellers.

FAQ -  We closed and I have the keys. Anything else that I should know?

Congratulations! Enjoy your new home. The closer at the closing should have given you a packet with copies of all of the closing docs and mortgage papers in it. Make sure you find a safe place to sort those documents. You should receive a copy of the deed from the County in about a month. Put that with your closing packet.  

In Michigan the closer would have put the Homestead Exemption form on top of your packet, so that you can take that to the Township and claim your homestead exemption. That has the impact of lowering your taxes on the property about 30% lower than they would be without it, so get over to the Township and get that in ASAP.

For most closings you would now be pretty much home free. We’ll just look at a few things to be aware of and a danger or two.

If you were provided with a Home Warranty as part of the deal, it’s a good idea to call the company

and just make sure that they have your contact information correctly recorded in their database. Also put the warranty brochure or other paperwork that you received somewhere safe and somewhere that you can remember if you need to call in a problem. Remember that you must call the warranty company first if there is a problem. They will not reimburse you after you’ve called your own plumber in to fix something.

Make sure to contact the various utilities to check that they have done any final readings that were requested and transitioned the accounts into your name. If you are on city water and sewer you may have to wait until the next billing cycle before the bill can be pro-rated between you and the seller. Check with the city water department on how they will do that. If the bill comes to the house, contact the title company that represented the seller and get them a copy of the bill. They are responsible for paying the pro-rated portion that the seller owes. You may have to send it through your agent and the listing agent to get it to the right place.

You may wish to consider having the door locks re-keyed. Even if the seller gave you all of the keys that they had to the place there could be others out there in the hands of relatives or neighbors. It’s just good practice to change the locks when you change ownership.

What about if I find something unexpected wrong with the house now?

Well, at this point it’s your house. You had your chances at the inspections and final walk-through to uncover those things. It is possible that the old owner was unaware of the problem, so don’t

immediately assume that this was some defect that they hid from you. Hopefully it is covered under the home warranty. If not, it is your problem now as the new owners. If it is an issue concerning a cloud on the title (a long lost relative suddenly showing up and claiming a right to the property) call the title company. It is their responsibility to protect you against that type of claim.

It can get a little hairy if it involves an unrecorded lien (or tax) against the property. You can make the case that the title company should have found that lien and they will fight back that it was not recorded anywhere and their title commit clearly states that they are insuring you against recorded issues. If it turns out to be a tax issue the title company probably should have caught that and you should press your case with them.

It is possible that the old owners did hide some material facts from you; things like the fact that they finished the basement themselves without pulling permits (lots of homeowners do that) or that the deck that they built out back actually encroaches 5 feet into the rear neighbor’s yard. Those “facts” should have been disclosed on the Seller’s Disclosure, so maybe you think that was a fraudulent document; however, we have just stepped across the line from real estate into legal matters, so I will invite you to find a good lawyer to handle your questions on what to do about that.

I hope that you’ve enjoyed this series of FAQ posts about the real estate process from the buyer’s perspective. I have one more post for buyers to cover some topics that may not have fit into any of the other posts. Most of that post will be links to background reading that might help answer questions for first-time buyers or buyers moving into strange new situations, like moving from the city to the country. 

Getting excited by a warranty…

As long time readers of this blog know, I do not generally endorse products here, nor have I gotten all that excited about most of the “new and improved” products that have come out lately for the real estate business. However, American Home Shield (AHS) has just rolled out a product in this market that is different enough and has enough meaningful new features that I’ve gotten excited about it.

The new product is called Home Warranty FlexPlan. Like most home warranty products it has a base-level plan and then offers upgrades to that base level. AHS calls their base level plan the Core Coverage Plan and it covers most of the core mechanicals – heating, Air Conditioning, duct work, Plumbing, Plumbing Stoppages, Whirlpool Motor and Pump, Water Heaters, Electrical, Exhaust/vent/Attic Fans, Built-in Microwaves, Dishwashers, Garbage Disposal Units, Ranges/Ovens/Cooktops and Trash Compactors. That is a fairly standard list of things to cover, although there may be a couple of things on that list that you won’t find in other warranties.

AHS includes the somewhat standard 13 SEER replacement coverage if they have to repair an older defective air conditioning unit. What is not standard in the industry, is that AHS includes in what is covered under this Core plan, the need for repairs to these units that may be caused by sediment, rust, corrosion and insufficiently maintenance. Think about it. What causes a lot of problems with the items on this list is neglect by the previous homeowner. This policy appears to cover the issue that might be caused by that neglect.

AHS also introduced two levels of upgrade to the Core Plan that are really noteworthy.

The AHS ServicePlus Package is available for an extra $79 and covers six critical areas that all home sellers and buyers should be covered for: Refrigerant recapture, reclaim and disposal (should they have to repair your air conditioning unit or a refirergator), removal of defective equipment, pulling permits (up to $250) for any repair work that requires a local permit, code violations (bringing things up to code, with a max of $250/coverd item), covering undetectable pre-existing conditions (a major potential issue in foreclosed homes)covering repairs to correct improper installations, past repairs or modifications (in other words correcting the mistakes of the not-so-handy-man previous homeowner) and correcting issues caused by mismatched systems (likely another handyman-caused issue). This coverage covers a multitude of past sins and should give the buyer much greater peace of mind, especially when dealing with a foreclosed home, where the previous owner is long gone and the bank has included 40 pages of “we know nothing and are liable for nothing” language in the deal.

For an additional $55, AHS has what they call their CoveragePlus Package, which adds coverage for a number of niggling little items that most buyers just don’t want to deal with, including: ceiling fans, garage door openers, telephone wiring, built in food centers, doorbells, instant hot/cold water dispensers, central vacs and smoke detectors.

To these coverage plans and packages it is possible to add up to 11 more coverage items from refrigerators w/ice dispensers to swimming pool and spa equipment to well pumps and septic systems. Each has an ala carte price.

I have not been an ardent fan of home warranties in the past, but this new set of products from American Home Shield has made a convert of me. The money to pay for the first year coverage of all of these items would easily be recovered if almost any of the covered items had to be repaired or replaced. The fact that AHS has taken a position that covers so many of the unknowns and common maintenance (or lack thereof) issues and handyman-homeowner-caused issues makes this the only home warranty product that I’ve seen that should be considered mandatory for all buyers.

Now there are two things that I will insist that my foreclosure home buyers do – get an “Eagle Brand” extended coverage title policy and get the AHS Home Warranty FlexPlan with at least the ServicePlus Package. Get both of those, plus have a good inspection done, and you’ll be about as well protected as you can get when buying a foreclosed home.