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Buying a home? Form a team first. Here's where to start

As the housing market continues to face an affordability crisis, LegalShield Provider Lawyer & Managing Partner of Fiffik Law Group Michael Fiffik joins Wealth! to discuss how homebuyers can best set themselves up for success when navigating the market.

"Do your homework if you're going to be a buyer. Before you get started, I would assemble your team — a realtor, a lawyer that is experienced in real estate work, and a lender — and have a game plan before you start looking for a home, because it is very expensive and it's more complicated anymore these days than it's ever been," Fiffik says. He explains that having a team set up beforehand will provide a significant advantage in an already complicated housing market.

He adds that having an experienced team by your side can come in handy if issues arise with the title or home inspections. A realtor and lawyer can work together to assess the significance of these issues and even negotiate a deal. Fiffik encourages homebuyers to get as much information from the seller as possible to avoid any surprises after they move in as well as any unexpected additional expenses.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

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This post was written by Melanie Riehl

Video transcript

Well, buying a house has never been more expensive.

According to Red fin, the median US home sale price hit an all time high of $394,000 in the four weeks ending June 9th.

But with yesterday's CP I report giving hints that inflation may be cooling.

There is some optimism that mortgage rates may become more friendly in the months to come.

So if you're thinking now maybe the time to jump into the market, you may want to stop and fully think through all of the potential hidden costs and legal issues that you may face to help us break down those issues.

Let's bring in Mike Fiffick who is the legal shield provider, lawyer and managing partner of Fick Law group.

Great to have you here with us today, Mike.

All right.

So a lot of people are trying to figure out if they're gonna be paying some of these high average home prices legally where they need to make sure they're covered along the way.

What's the number one legal thought that people should have as they're entering in to a home contract?

Well, hi, Brad, it's great to be here and Thanks for having me.

Uh do your homework.

That's what I would say.

Do your homework if you're going to be a buyer uh before you get started, uh I would assemble your team, a realtor, a lawyer that is experienced in real estate work in a lender and have a game plan before you start looking for a home because it is very expensive and it's more complicated any more these days than it's ever been.

Uh, home prices are expensive.

The National Association of Realtors litigation is changing a lot about how homebuyers uh interact with buyers agents and how they're going to pay for it, potentially increasing the cost of buying a home.

So it's more complicated now than it's ever been and having access to somebody that's got experienced like a real estate attorney is gonna be uh super important for home buyers and give them a real leg up and an advantage in this complicated home buying environment that we're in currently.

And so with that in mind, where are you seeing the biggest hang up that prospective buyers run into in the legal process for buying a home?

I think that they go into it without a game plan and they don't really understand exactly what they're going to run into.

They need to know what to expect.

And one of the first complications that they're gonna run into is negotiating with their buyer's agent because they're gonna have to have a contract that's something new as of August, that home buyers are gonna have to negotiate with the buyer's agent and they may have to agree to pay their buyer's agent a commission, maybe up to 3% of whatever the sale price is for the home.

And that's gonna be something new for homebuyers that it's traditionally been paid by sellers.

So that adds a layer of expense.

Now, we don't know exactly how that's going to work out as we move forward under these new rules.

And uh this, the the homeowners are going to have to be able to have some flexibility in those agreements to uh react to.

However, the deal is rolling down, they may also run into problems with home inspections, uh problems that come up with title on the property and they need somebody experienced to help them uh understand what those problems are, what their significance is and how to negotiate with the seller in order to get their deal to the closing table from negotiation and, and submitting the first bid all the way through closing on a home.

What should home buyers really be prepared for in that process?

Uh They should be prepared for things to happen at the very last minute and have a plan to not allow that to happen.

Closings by nature are deadline driven.

So a lot of things happen at the very end and buyers often feel a sense of being rushed, anxiety and stress because everything kind of comes together at the last minute and it doesn't have to be that way.

You know, if they have a real estate attorney involved on their behalf, that person can sort of quarterback the project and keep them up to date all along the way so that they feel comfortable and know that, uh, with their understanding of what's happening in the process and have some confidence and security for really what is the biggest purchase of their lives.

You know, as we're seeing new homes also take on more of a percentage compared to historical averages of the overall home sales as of right now as of this year.

Um One of the huge things that a lot of prospective buyers may be thinking about is legally, what should I be concerned more about as I'm entering into a contract for a new home versus the existing home that they may have previously owned or if they may be selling in order to purchase a new home, I think that because homes are such a difficult thing to a uh for people to afford with higher interest rates, they don't have as much of a margin for error in the event that they buy a home without doing their homework and they run into problems, right?

That home has some kind, some type of a big defect in the property that wasn't disclosed by the seller or that they didn't realize whenever they did the inspection.

So they really need to spend some time doing their homework.

And that might mean asking the seller through the uh sales agreement to give them more information than it might not typically do including what's called a clue report, which is a report based upon the um insurance claims that were made in relation to that house, you know, that's available to sellers and buyers can ask sellers to get that and provide it to them.

So doing some extra homework so that they don't end up with a surprise after they move in, I think would be really important for people because of affordability issues.

We also have a lot more people who are buying homes that aren't married.

So we've got a lot of co ownership that's happening.

Now, mar couples are waiting to get married longer or there are more unrelated couples that are buying properties because they can't afford it on their own.

So before you would buy a home with somebody to whom you aren't married, it is really important in advance to get some type of a co ownership or a cohabitation agreement in place because it is very difficult for unmarried people to get out of a property that they own together because the laws really don't.

There really aren't very many good laws for uh division of property by unmarried people.

Michael Fiffick, who is the legal shield provider, lawyer and managing partner of Fick Law group.

Thank you so much for taking the time here with us on the day, Mike.

Appreciate it.

Thanks Brad.

Take care.