Houses are plentiful and interest rates have plummeted, making the American Dream affordable again. Make sure, though, that you're a practical homebuyer. Protect yourself with purchase agreements, inspections, disclosures and more.Hawaii law sets out buyers' and sellers' obligations. Before you begin your home search, get to know the process.
An Agent Can Help
While some people can handle a home purchase, others would rather work with a Realtor or broker. A trained agent can help with negotiations, calculate what you can afford and compile documents. The Hawaii Department of Consumer Affairs site will let you search for licensed professionals.
Sellers have to tell buyers about problems with the property. In fact, it's illegal to hide major defects — say, volcanic damage. In Hawaii, sellers must provide information about everything from swimming pools to soil contamination. A Hawaii Association of Realtors template details disclosure requirements.
A Detailed Agreement
Once you find a home, spell out details such as down payment, closing date, commissions and more in a purchase agreement. In Hawaii, a basic contract is 13 pages long. There's a sample on the Hawaii Association of Realtors Web site.
An inspection lets sellers show that the home is safe. It reveals problems to buyers. Typical inspections look at cooling and heating systems, structural soundness, kitchen fixtures, floors and ceilings. The American Society of Home Inspectors can give you more advice on hiring a professional.
Protecting Your Title
A title search is a check to make sure that no one holds a lien against the property and that the seller is free to sell it. It's possible for an individual to conduct a search, but the process is complicated. Help from a real estate attorney or title company is invaluable.
Lenders require you to buy title insurance that protects them if a problem surfaces later, but this policy covers only them. To make sure you're protected, purchase coverage for the amount of your loan.
Foreclosures and Short Sales
These days, buyers can find bargains in homes in foreclosure or whose owners are on the brink.
In Hawaii, as in most states, foreclosure properties are sold at public auctions. The property is sold 'as is,' meaning there is no promise that the property is in good condition.
In a short sale, the lender gives the owner permission to sell the home for less than what is owed on the loan. Sometimes, the lender will require that the seller make up the difference and pay off the loan. The buyer needs to be aware of "hidden" costs for things such as repairs or back homeowner's association fees.
For homebuying legal advice, please contact a Hawaii real estate lawyer.