Is your new home a lemon? Here's what you can do about it in today's intense housing market

My husband and I bought our first house together in 2016. It's a cute cottage built in the early '90s. As you'd expect from that era, it came with the requisite seashell sink and a smattering of square beige bathroom tile -- but there were no glaring issues. 

Fast-forward a few months after the inspection and the closing. We've moved in and I'm stocking the cabinet under our kitchen sink with cleaning supplies. The floor of the cabinet suddenly gives way to reveal a massive, oddly-shaped hole the previous owners had covered with a flimsy poster board (y'know, the kind you'd use for school projects or homemade signs). The board had been cut perfectly to size, spanning the length of the also-white cabinet interior, obscuring any signs of the problem underneath. That is, until I tried to put stuff in it. 

The sellers didn't disclose it, we didn't notice it and it didn't show up in the inspection. And this was all pre-COVID, before home buying became a full-time competitive sport. 

"It's been a little crazy in the real estate market," realtor Ann Broderick tells me. That's putting it lightly. 

A combination of low housing inventory and low mortgage rates have led to a 22.9% increase in the median sales price of homes compared to last year, according to the National Association of Realtors.Given that buying a home is a major financial investment (if not the biggest), you really don't want to end up with a dud. 

Could we have done something differently to spot the cabinet issue earlier? Is there anything we can do now? In my quest to find a permanent fix for the wonky kitchen cabinet, I've learned some things that might've helped us avoid this altogether -- and what options we have now that we are dealing with a big hole in our cabinet.

Know before you buy

There are some important things you can do to ensure you don't end up in a situation like mine, starting with being proactive before you have the keys to your new place. 

"My recommendation is to use professionals. That's professional real estate agents, that's professional home inspectors, it's professional closing attorneys and it's professional title searchers," Broderick says. If you have qualified people with you through every step of the process, there's a lower chance you'll end up surprised by an undisclosed issue once the house is yours. 

With so much extra competition for homes this year, Broderick notes that more home buyers are skipping the inspection process altogether. That feeling of urgency to make a quick offer is understandable. But you have to understand the potential risks of skipping the inspection process, says Broderick. 

Instead of waiving the inspection, she suggests leaning on your real estate agent, friends or family to recommend a qualified inspector. You should also attend the inspection yourself. Broderick urges buyers to be "active participants" at the inspection -- ask questions to get a better sense of potential issues and quirks with the house so you can make the most informed decision possible. 

She also advises clients to read the seller disclosure carefully. That's the document where the seller is supposed to list and explain all of the home repairs needed. If you don't want to dig through the seller disclosure, or would also like an expert to take a look, hire a closing attorney. It's their job to search the details and ask questions on your behalf. 

You should ask for transferable warranties, too, Broderick explains. "A lot of buyers don't ask if the roof had been replaced, if a new HVAC had been installed; that transferable warranty will go with the new buyer, and I think that's important to have." 

Separately, you can also consider getting a home warranty, she adds. Different from homeowners' insurance, which covers damage to a home caused by flooding, fire or other major events, a home warranty covers some of the costs of significant, but smaller repairs after the home is yours -- issues with plumbing, electrical wiring, the heating and cooling system and more.

Once you have the keys

Since we planned to gut our kitchen at some point anyway, we simply covered the hole in the cabinet back up to mitigate a mutually unpleasant run-in with any neighboring mice (the hole opens to our backyard) and forgot about it. 

It wasn't until a few years later when we started pricing things for the kitchen remodel that we realized the ridiculously high cost of new cabinets. Replacing the wonky kitchen cabinet would have meant replacing all of the lower cabinets on that side -- somewhere in the $10,000 to $15,000 range. Ultimately, we opted to paint them instead. 

We've covered the hole better than it was in the poster board days, but the fix is still makeshift at best. I wanted to find out if we have any recourse now that the house is ours. 

Unfortunately, most of the opportunities for remedies have to happen before the sale of a house is finalized, according to LegalZoom. The Magnuson Moss Warranty-Federal Trade Commission Improvements Act -- aka the Lemon Law -- protects select vehicle purchases, as long as they also have "an implied or written warranty (or service contract)." State laws vary, but similarly protect purchases of cars and other vehicles -- not homes. Find your local Lemon Law by state.  

"Once the home is closed, there is no remedy to a home buyer if an issue arises outside of obtaining an attorney and taking it to a court of law," realtor and broker associate Susan Severson told LegalZoom. 

Broderick, the realtor I spoke to, confirmed this. You can use a home warranty or a transferable warranty to cover issues that come up after you buy the house. But if the issue was already there when you moved in, but not disclosed, it might be time to talk to a lawyer. 

Who is responsible for undisclosed problems with a home changes by state. It's often the seller, but it can also be either the seller or buyer's real estate broker or agent -- or the home inspector. Either way, your options are largely limited to legal action after the sale closes. Consult your state laws and talk to a real estate lawyer if you have questions about your specific circumstances, as there may be exceptions by state and situation.