Five Questions Home Buyers Should Ask to Get a 'Real Bargain'
The recent upswing in the housing market has led many buyers to conclude
that they have been playing in a seller's market, and while that may be
true there are still things smart buyers can do to get the best possible
deal on the home of their dreams.
It is certainly easy to see why so many buyers have been discouraged by
the recent housing market. Prices, it seems, are constantly on the rise,
and many houses have sold within a matter of days or weeks. While the
situation for buyers is improving in many places, other areas of the
country remain hot, making it even more important to shop around and to
know how to get the best deal.
Whether you are in a buyer's market or a seller's market, there are a
number of questions all buyers should ask when shopping for a home. The
answers to these five questions can be extremely valuable, no matter
what kind of real estate market you are in.
Question #1 - Why are you selling?
This is an important question to ask no matter what you are buying, but
it is an even more essential question when it comes to buying a home.
After all, for most of us a home will be our single biggest asset and it
is vital to get the best deal, and to be aware of any condition problems
that may exist with the home you are considering.
There are two main reasons to ask this important question, and they are:
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To be able to tailor the offer you make in a way that will best meet
the needs of the seller, and
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To determine whether or not the seller is highly motivated to sell the
home
For instance, if your question helps you learn that your seller is
moving into a retirement community, they may be willing to carry back a
first or a second mortgage, and this can provide an excellent secured
source of income. This type of arrangement can be a winning situation
for all involved. The seller can earn a steady interest rate of 6% or
so, while the buyer gets easy financing.
You may also learn that the seller is facing foreclosure and need to act
fast to get the most out of their home and to stave off any possible
foreclosure auction. No matter what the reason for selling, it is
important to ask, since the listing agent will seldom volunteer this
important information.
Question #2 - How much did the seller pay for the home?
In most cases the answer to this question is a matter of public record,
easily accessible for most buyers. Knowing this vital piece of
information will put the buyer into the position of being better able to
gauge how much room for negotiation the seller may have.
Another good thing for the potential buyer to know is how much is still
owed on the mortgage, as well as whether or not there are any
outstanding liens, like second mortgages or home equity loans on the
home.
Knowing how much the seller still owes is a good way to determine how
much cash the seller will need to have at closing time, and this will
help the buyer to better tailor his or her offer on the home.
Question #3 - What problems exist with the home?
In most parts of the country, home sellers are now required to provide
potential buyers with a written set of disclosures which reveal any
material facts that could affect the market value of the home.
A good listing agent will be sure to get the seller's written
disclosures a the time the home is listed, and they should have it
readily available to all potential buyers who request it. It is
important to review this disclosure document carefully in order to avoid
unpleasant surprises down the road.
It is also a good idea to go beyond the disclosure document and
have a home inspection done before making an offer. Compared to the cost
of the average home, the cost of a home inspection is negligible, and
the results of the home inspection will give the buyer a lot of
bargaining power when it comes time to make an offer.
Question #4 - What issues have you had with the home?
This question is designed to be open ended, and it is intended to spark
a discussion of any past problems, most of which, hopefully at least,
have now been corrected.
In most parts of the country, there are no laws that require home
sellers to reveal all past problems that have existed, but it is a good
idea for buyers to try to gather as much information on past problems as
they can.
Question #5 - How are the public schools?
For those with school age children, and for those planning to start a
family, the quality of the public schools is a vital consideration. Even
for those buyers who plan to send their kids to private schools, it is
crucial to remember that the quality of the local public schools can
greatly affect the value of homes in the community.
In fact, affluent buyers generally prefer to purchase homes in
areas where the public schools are of excellent quality. As a result,
homes in areas where the public schools are of poor quality can often
sell quite poorly, even in hot housing markets.
It is important for the buyer to do plenty of research, including
looking up the latest statistics on the quality of the local schools. In
most cases these statistics will be based on factors like average test
scores and graduation rates. In some cases the listing agent will have
this information, while at other times the potential buyer may need to
find it on their own.
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