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- Verify local zoning laws with your real estate agent to ensure permitted uses, structures, rentals, and vehicle rules fit your lifestyle.
- Check public records at the planning department and building and safety department for permits, planned developments, and land alterations.
- Confirm flood risk by checking FEMA maps; budget for separate flood insurance if the property lies in a flood zone.
- Get at least three quotes for homeowners insurance; compare coverage limits, deductibles, and replacement cost to avoid over or under insurance.
- Purchase title insurance after a title review to protect against undiscovered heirs, liens, and future legal battles.
Order a survey
A survey is a map of your property that shows its boundary lines along with any easements. (Easements refer to someone else’s usage of the land.) Surveys are generally only required if you’re looking at a rural property or significant acreage. With larger properties, however, they can be important because the exact coordinates of the survey will be listed on the deed.
A survey won’t be required by most lenders if you are looking at a non-rural property in most states; instead, they will rely on your title insurance. But on larger properties, you may be required to get a survey to obtain financing, and if there’s any discrepancy (for example, a neighbor’s fence encroaching on the property), then it might need to be resolved before you can close on your mortgage loan.
Understand any zoning laws
Ask your real estate agent to find out if there are any zoning laws that pertain to the property.
Sometimes zoning will prohibit certain types or numbers of structures, such as mobile homes or sheds. Sometimes zoning laws dictate rental capabilities or the types of animals you can have on the property. Sometimes zoning laws prohibit the parking of certain vehicles or trailers. Make sure the zoning requirements work for your lifestyle.
Conduct public research
Pagano says it’s important to check with two local government departments: the planning department and the building and safety department.
The planning department can tell you whether any planned establishments could affect your home’s value (such as a jail or waste management facility).
The building and safety department can tell you which permits have been pulled for the property. Permits will show that any updates were done correctly. They will also show if there have been any fills or cuts in the land, which could be important if you plan to add on in the future.
Consult a construction professional if you have any questions about the home’s permits.
Check the home’s flood zone status
Check to see if the house is located in a FEMA flood zone. You can do this by looking up the address on the documented FEMA maps. Most of the time, a FEMA flood zone is determined by elevation from sea level.
If the home is in a FEMA flood zone, you’ll need flood insurance. This is a separate policy that costs between $1,000 and $2,000 per year on average, depending on location. Your insurance agent can help you obtain flood insurance, which is underwritten by FEMA.
Secure homeowners insurance
It’s best to get at least three quotes for homeowners insurance. Your real estate agent and other homeowners in the area may have recommendations.
When comparing insurance quotes, be sure that the coverage limits and deductible amounts match on each quote; that way, you can properly determine which insurance premium is a better value.
Talk with each insurance agent about which coverage options are best for your situation. There may be certain natural disasters in your area that they recommend coverage for — earthquakes, sinkholes, hurricanes, and so on — which might require specialized terms.
But it’s also important not to be over-insured. Look at the dwelling coverage and make sure the replacement cost value seems appropriate. Replacement cost is usually higher than market value, since it figures in the possibility of rebuilding the house completely new from the ground up.
Consider the amount of your liability coverage
Your liability coverage is designed to protect you and your home in the event that someone sues you for injury. Given the cost of healthcare in the United States, obtaining a reasonable amount of liability coverage should definitely be a part of your due diligence to ensure you feel it’s sufficient to cover potential claims.
Talk to your insurance agent about the liability coverage that’s best for your situation.
Get yourself some title insurance
Title insurance should be a top priority as you’re doing your due diligence. The title company will conduct a title review, which is designed to uncover any heirs or outstanding liens before you purchase the property.
But a title review is not always comprehensive. If the title company misses something, title insurance protects you from fighting the ensuing legal battle.
Pagano encourages all her buyers to take their due diligence seriously.
“It’s better to take the time now than to have regrets later. A house isn’t something you can just return to the store!”
Remember, you don’t have to go through this due diligence process alone. Your real estate agent is there to help every step of the way. Once you’ve completed your due diligence, you can rest assured that you’ve done everything possible to make your home purchase a success.
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