How to Avoid Purchasing a Lemon When Buying a Home in Houston?

How to Avoid Purchasing a Lemon When Buying a Home in Houston?


Patrick: Hello, I’m Patrick. Kiesha: And I’m Kiesha. Patrick: And welcome guys to The Real Estate
Stew, we’re the What’s Cookin’ crew. And Kiesha- Kiesha: Yes. Patrick: I know that pot’s been boiling for
a while. Kiesha: Yes. Patrick: We got some hot topics in there I
know. Kiesha: We are always grateful for all of
our viewers who send in questions and comments that are going to benefit all of the viewers,
so thank you, thank you, thank you. Patrick: Let’s see what’s in the pot. Kiesha: Yay. Patrick: Oh it is hot. Kiesha: Are y’all ready? All right. Patrick: Let’s see what we got here. Kiesha: What do we have? One of our viewers wants to know, oh this
is a great question, is there a lemon law for real estate? Patrick: Lemon law for real estate? Kiesha: Yes, a lemon law. Patrick: Here in Texas, okay. Well let’s talk about that Kiesha. Patrick: Well first of all, there’s lemon
laws for cars, and lemon laws for consumer goods. But for houses? Kiesha: Right. For those who may be wondering what is a lemon
law, that’s when you feel you’ve gotten a bad product, or it’s defective, and you can
basically take it back. Patrick: That’s right, and in some cases like
with three days I’m going to get it, but Kiesha lets, you know … I want to break it to you. No, there’s no lemon law for homes. Kiesha: Unfortunately. Patrick: Unfortunately. But, there are some opportunities and things
that you can look for as regards to the home purchasing- Kiesha: Right. Patrick: For protections. Kiesha: Things you can do on the front end
before you actually go through with the purchase- Patrick: To protect you on the back end. Kiesha: Right, right. Patrick: I like the way that sounds, yeah. Kiesha: And make sure you have all of the
information you need to make an informed decision. So what are those things, Patrick? What do we have, what options? Patrick: Well there’s three things specifically
that come to mind. Kiesha: Okay. Patrick: First, seller’s disclosure. Kiesha: Seller’s disclosure. Patrick: Second, home warranty. Kiesha: Yes, home warranty. Patrick: From the builder. Kiesha: Builder’s home warranty. Patrick: You got it, let’s differentiate. And number three, home warranty as for a residential
service contracts. Kiesha: Gotcha, so a third party home warranty? Patrick: You got it. Kiesha: If you’re purchasing real estate,
here in Texas specifically, there is no lemon law. However, you do have those three things available
to you. So let’s talk a little bit about each of them. Patrick: Yeah, let’s start out with the seller’s
disclosure. You know you might say, “Well, seller’s disclosure,
what’s that?” It’s just what the name implies. Patrick: Seller’s will basically give information
up front, typically it’s several pages. It will be in writing. It’s to let you know to inform you of any
information regarding the property, as a regards the condition overall. Patrick: Things such as, did the home ever
flood? Is it in a flood zone? Are there foundation issues, any cracks? Or the roof, is there an overlayment? Even things about the appliances, and how
many. Do we have two AC units, furnaces, it tells
a little bit about your HOA. Are there dues that are involved, et cetera,
if so are they annual, monthly, what’s the cost? Patrick: The most important thing I will tell
you that you should take away from this with the seller’s disclosure is that it’s information
that’s known to the seller. Patrick: If the seller does not know of an
existing material defect, then understand they’re not at an obligation to disclose,
because how do you disclose something you don’t know? That’s why it’s very important to go beyond
the disclosure with inspections and things like that, but we’ll talk about that in a
later segment. Kiesha: Good info. The other thing too, that I’ll tack on to
that as it pertains to a seller’s disclosure, the seller doesn’t have to go through any
great lengths to get any information about the condition of the property. Kiesha: They don’t have to hire an inspector
or anything like that themselves in order to be able to tell you information about the
condition of the property. It’s truly what they know. Patrick: It’s not only that, Kiesha, we want
you to know too the seller’s disclosure is something that you should, and will, have
access to. In most cases upfront before you even contract. I mean literally before you execute a contract
you can say, “Hey, seller. Can you provide me the information about the
property, the seller’s disclosure?” And most sellers will have that available
for you. Kiesha: Right. The second thing you mentioned, Patrick, was
a builder’s home warranty. Patrick: Yes. Kiesha: I think it’s important to say that
with the builder’s home warranty, contrary to the seller’s disclosure, and the third
party home warranty or residential service contract, builder’s home warranties go with
new construction. Kiesha: When you’re purchasing new construction
the builder may provide a home warranty that they offer to you as a buyer. They are not required to purchase or provide
a home warranty, but they may. Patrick: The fact that you said may is very
important, Kiesha. One thing we want to point too guys, that
even if you are provided a builder’s home warranty, understand that you have to have
a mindset of later on down the road. You know, what’s the stability of this particular
builder? There are builders that sometimes go out of
business, and if they go out of business what happens with that warranty that was in place? Does it go out? Patrick: These are things that you need to
think about, buyers, and also have certain protections in place in the event that something
like that were to happen. Kiesha: Now the structure of that warranty
is pretty standard. You’ll often hear the warranty referred to
as a 1-2-10, or a 2-10 warranty. Which means for the first year just about
everything in the home is covered, aside from cosmetics and living things, like grass and
trees. That’s the first year. Patrick: In the second year you get into your
mechanical issues, and things like that. Kiesha: AC- Patrick: AC. Kiesha: Heat, plumbing, electrical, those
things are covered for two years, and then for 10 years you have some structural coverage. Which includes- Patrick: The foundation- Kiesha: the foundation- Patrick: and things like that. Kiesha: Absolutely. Absolutely. That would be your builder’s warranty, again
that would apply to new construction. Kiesha: The third thing you mentioned was
… Patrick: Another type of warranty. Right? Kiesha: Right. Patrick: But we refer to it as a residential
service contract. Like a third party home warranty. With this, think of it guys as it’s kind of
an addition to, say for instance, your insurance policy you might get. A lot of people say, “Oh but my home is insured.” Yes, but a third party residential service
contract comes in in the event that, let’s say a year or two down the road, you have
a problem with your hot water heater, or your dishwasher goes out. Things that we might reference as something
… or your AC- Kiesha: In Texas. Patrick: Especially in Texas, that’s a big
thing. Kiesha: That’s not good. Patrick: Well a lot of the residential service
companies are set up to where you pay a flat fee for the annual contract, and then there’s
what’s called a service fee. Kiesha: Right. Patrick: You might pay 3, 4, 5, $600 for an
annual policy that covers 12, 13 months. If you have an issue you call up the company,
they charge maybe $65, $75 dollars to come out. They will look at the item and either repair
or replace the item. Kiesha: And just like any other contract that
you’re entering into, you just want to make sure that you understand the scope of coverage. Because all of the residential service contracts,
the providers structure their contracts differently, and their agreements differently. Kiesha: You want to be very clear about what’s
included, and what’s not, and what is expected of you as the homeowner, or home buyer. Patrick: Because there are things, Kiesha,
like what we refer to as pre-existing conditions. For many of our home buyers that’s very important,
because you may have your home inspected but something could be missed. And then three months into this process you’ve
just bought 100, $200,000 house and all of a sudden you have an item that’s broken, and
then you get a service repair company to go out, and it says, “Oh, you know this was existing. There’s proof that this damage was done six
months ago.” Patrick: Uh oh. What do you do? Some companies do not cover that. Check the policy because some do. And for many of you, depending on the home
that you’re purchasing, you may have a need for that coverage. Kiesha: Yes. That underscores, again, the importance of
the inspection. Patrick: Yes. Kiesha: Get a third party professional to
come in and check the home before you purchase. Before you close on the home you have an opportunity
to call someone in and give you information on the condition of the home, and different
components of the home. Patrick: With that being said guys, Kiesha
don’t want to forget we were talking about this earlier. We’ve been saying for a long time were going
to do this and we said … listen, we are going to have a special episode where we are
going to actually take you out on site live, with us, to actually go through an inspection. Kiesha: Yay! Patrick: We’re going to walk a property. We haven’t decided if it’s going to be resell
or new, but whatever the case is guys, you’re going to love it. Were going to have an actual inspector and
were going to go through and you’re going to get to see how it works, why it works,
what’s important about it. And trust me, once you see us go through this,
guys any of you out there thinking about buying a home you’re going to be getting an inspection. Kiesha: Now if you have any questions about
anything that we’ve covered in this episode please reach out to us. We love to hear from you. Kiesha: You can E-mail us, you can like, you
can comment, you can subscribe. Patrick: Subscribe. And now guys, don’t forget hit the bell. Kiesha: Absolutely. Patrick: All right. Kiesha: Thank you so much for joining us,
it’s always our pleasure to be here with you providing great real estate knowledge. Kiesha: We hope to see you next time. Patrick: Bye guys. Kiesha: Bye-bye. Patrick: Yeah I like this … Kiesha: Patrick. Kiesha: Talked about the- Patrick: And cut. Kiesha: Oh. I needed to do the transition. Patrick: Oh did she? I messed up. Kiesha: I’m supposed to do the transition. Roy: It’s all right. Patrick: I’m sorry Roy, I’m sorry Kiesha. Kiesha: That’s okay. Patrick: … everything, so what are a few
other things that- Kiesha: No, I think you did. Kiesha: Sorry. Kiesha: Okay, cut. Roy: Okay.

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