Mistake No. 4
4) Failing to take out adequate insurance after signing the contract.
This is a much neglected area that does need your attention. When you sign a contract to purchase a property you are deemed to have an interest in the property.
At this point you have no idea if the seller has adequate insurance or if they have any insurance at all. I strongly recommend you get professional advice to confirm the replacement cost of the house and this should be your starting point. It is not wise to insure for the purchase price only as this will often leave you under insured.
Horror Story – Peter brought his dream home subject to receiving finance within 21 days, Peter was advised to take out insurance immediately but he decided to wait until his finance was approved and the contract was unconditional.
Unbeknown to Peter the seller had not renewed his house insurance that ran out last month, thinking that why should he renew the insurance if he was selling it.
7 days after Peters offer was accepted the heavens opened up and it rained heavily for three days.
Peters dream home suffered massive water damage not only from the flooding but also from leaking roofing. Peters finance has since been approved and the contract is now unconditional. Peter was not told about the water damage until after the finance approval. The water damage repair and cleanup bill is estimated to be over $35,000. Now the argument is “who’s going to pay” and the lawyers are fighting it out.
A simple $250 insurance policy is all that was needed to avoid this disaster. (by the way, the lawyers charge upwards of $285 per hour)