Here is something regarding the purchase of a used home in Texas. Some parts of the following may only be applicable in Texas but most of it applies to what you are doing:
1) Talk to the neighbors that live around the house you are considering purchasing before you purchase it. Dont be shy, knock on the door and say hello. Maybe you might start by asking them about schools or local churches, or whatever. Then ask them if they know of any problems with the house. If they have seen any repair trucks at the house for example. Ask them if they know why the sellers are moving.
2) In Texas ALL real real estate inspectors are licensed with the state. Never hire any inspector suggested by any real estate agent involved in the deal! Find your own inspector and get references and CALL those references! See if you can find one with professional liability insurance. MAKE CAREFUL NOTE of the agreement the inspector wants you to sign! I repeat! Make careful note of the inspectors agreement! In Texas the inspectors all have a clause limiting their liability to what you pay them. So, if you pay them $495 and they make a huge mistake that costs you $100s of thousands you are screwed. Strike through this part of the agreement if you can. I suggest you videotape the inspection. Open up every door in the place, every attic door and anything else you can get in to. And make the inspector look at everything you can. When you get the inspection report read every line! And demand the inspectors written notes they made during the inspection. Usually they just put what they noted in a computer and sometimes they screw up. Get the notes and compare it to the computer generated inspection report. If the inspector finds things to fix and writes up money estimates DO NOT trust that they know what the real costs are. If there is a plumbing issue and the inspector says its going to cost $100 get a real plumber in to give you real estimates, etc.
3) No matter what the inspector finds bring in a plumber, HVAC people. Hire an electrician, a roofer and pool company if there is a pool. If you have any question about anything bring in a professional! If they do an estimate make sure you read and understand it.
4) If the house is expensive hire an engineer to inspect the house besides hiring an inspector.
5) READ THE SELLERS DISCLOSURE. READ ANYTHING THE SELLER PROVIDES THAT LISTS PRIOR WORK, IMPROVEMENTS or ANY KIND OF WORK THE SELLERS HAD DONE ON THE HOUSE!! If they have anything listed on the disclosure they repaired or improved get all the receipts for any work they have done.
6) Again, Im speaking of used houses here. DEMAND they provide and carefully review the disclosure the person selling TO YOU received when THEY PURCHASED the house they are trying to sell you. Also get the inspection from when THEY purchased the house. The earnest money contract may stipulate that they have to give you prior inspections if they have lived in the house less than a certain number of years. No matter how long they have owned the house get the disclosure they received and the inspection they had done.
7) Go to city hall and find the permit department. Give them the address of the house you are considering buying and see if there are past permits that have been pulled for the house.
8) Call your insurance agent. Get them to run the address on the house you are looking at in the ChoicePoint CLUE system and the ISO A+ system. These databases may list past insurance claims. If your agent does not have access to these databases find one that does. You may find out things about the house they are not telling you about.
9) Ive listed a lot of things above. if you cant get these things RUN!
10) Ask the listing agent and the selling agent if they have Errors and Omissions insurance. If they dont do not use them. Ask your agent to pull all the MLS data on the house you are looking at and to let you read it. Find out how long its been on the market and what the person selling to you paid for it when they bought it if possible. A lot of houses have been sold several times. This is especially true of houses with problems. If you can find out who the prior listing and selling agents were on prior sales CALL THEM and ask them if they know of any problems with the property.
11) Besides not using an agent that does not have liability insurance BEWARE of real estate agents that work as independent contractors. For example, there is one HUGE real estate organization (think balloons) who has agents that rent their offices, etc. from the franchise owner. In the event your agent that works for these types makes a mistake you will have a tough time getting to the rich folks that own the balloon.
OK, lets say you do everything right. You hire the right people, you have a great inspector, etc. You do everything right and you buy by the house only to find that the house has horrible problems that have been covered up. And you are screwed. Big time! If you have to sue be very careful when it comes to lawyers and litigation. Find a board certified real estate lawyer and only sue of they take the case on contingency.
I sold FSBO years ago. I went down to the Title Company and told the attorney that I would see to it that he got the title transfer business if he would advise me, which he did.