We all know about closing costs, down payments, escrow and lending fees, etc; but, what about other expenses hiding in your next home’s history?

Here are 3 costs to check on right away and why you should request your agent pull a preliminary title report (prelim) from their title rep at time of offer or consideration of one.

If the home is behind on property taxes, the county registrar will need those liens to be cleared before recording the deed. Liens are recorded with the county as well and liens have priority; tax liens always go first. If the owner is behind in payments and other finances as well, the home sale has at least one more lien, the actual mortgage loan balance, that also has to be paid immediately upon sale.

If there are no additional funds left for them to cover, in order for the sale to go through, you as the buyer could be on the hook for that money or let the deal fall through if it’s not agreed in the contract to pay the balance. It will be thousands to bring the home to current on liens and pull the owners out of debt at sale.

Not an out of pocket expense you might have been prepared for without a prelim but one you might be asked to help with for the sale to complete.

Last year our local paper wrote an article about a woman who lost her home to an HOA lien (I believe she owed about $15, 000) that she couldn’t pay due to immediate job loss as a result of the pandemic. She owned the home OUTRIGHT. Free and clear. No other debts were attached to the property and her home was long paid off; yet it was auctioned off anyway and she was given a 30 day notice to vacate from her home of over 30 years that she had no mortgage on. Why? Priority liens need to be paid! You cannot continue to live in a community you are not paying for and the land isn’t entirely owned by you. You also shouldn’t a paid off home as no debts!!!

When a home goes for sale, the HOA will pounce even faster, and the county records will show in a title search the home is in default for such an amount and to whom. If the owner refuses or can’t pay, the buyer must in whole or part to save the deal. Otherwise it goes back to market and you have to restart your home search. It can be another expense of thousands to pay off; even if both sides split the bill if you do offer to put towards the balance due.

This is a tough one because it is a common and sad problem. Think back to post 2008 and now the last two years. Those who weren’t buying may not have been able to because they were losing their jobs; and, to save their home waiting for the world to restart, decided to put their home into forbearance as many mortgage companies offered; but the problem with that? When the forbearance period ends, a massive payment is due. The entirety of the payments you skip become due AT ONCE. Most people can’t do that so they decide to sell instead, sometimes people bust their butt to pay towards it, but whatever is outstanding must be paid in full. To do that, many are forced to sell before their forbearance becomes a foreclosure. Then you lose the home and the equity payed back becomes significantly less, six figures less.

Be aware that again, someone has to pay that forbearance and it’s the seller’s responsibility so if they have agent fees, selling costs, and a forbearance balance, they may not be able to negotiate much, paying closing costs, offer incentives, and may even request help because of all these mounting costs and little equity; despite this buyer’s market; which could be thousands from you. Again, someone has to pay at sale to transfer ownership.