Why should new home buyers have a contingency fund in place before closing on a new home? A new home purchase is exciting and emotionally draining at the same time. Many factors contribute to the selection of your home. The financial decisions and hoops that have to be jumped through can completely exhaust you. Even through all this, you move into your new home jumping for joy! You spend a night or two in your home and BAM! Something goes haywire. Maybe the water heater goes out, or the HVAC won’t heat, or there’s a plumbing leak in the crawl space.
How could this happen in your brand new home?
Well, remember, the home is generally not BRAND new. ALL homes have issues, even in new construction, and there are items that require attention. Although annoying, things will happen and timing is uncertain, generally bad timing at that!
The first reaction may be to call the realtor to complain, or to call the home inspector to place blame. If a step is taken back though, a discussion surrounding the problem-at-hand might have existed during the home inspection and it may even be noted in the report. This leaves the new home, as well as the repairs, in the hands of the new home buyer.
How do you AVOID this?
Implement these simple steps BEFORE you finalize the contract:
1. Thoroughly READ the home inspection checklist. What may look boring and tedious happens to include valuable information you need to evaluate your prospective home. You have leverage at this point before completing the contract to either agree to the condition of the home or, you can work with your realtor to negotiate necessary repairs with the seller.
2. In the SUMMARY section of the report, major concerns and deficiencies are generally identified. Don’t overlook these! Contacting the recommended specialists or addressing these issues will save you many headaches and possibly lots of money.
3. Set aside a CONTINGENCY fund to deal with the somewhat predicted and unforeseen issues that arise following closing. The home inspection only documents the condition of the home at the time of the inspection. As with any home, important elements generally go out at the most inconvenient times. If your home inspection checklist / report states “… at the end of it’s life,” take this seriously and plan accordingly. Water heaters and HVAC units often fit this category, yet they seem to be commonly overlooked. These items also have pretty specific limitations on their duration of operation. Not only are they likely to cause the most physical discomfort, they will also add to the mounting emotional stress surrounding your new purchase.
Following these simple steps should prevent unwanted hassles and a smooth transition into the home of your dreams!