You've searched far and wide to find the right home for you and finally have your eyes on that cute craftsman on the hill. You have cash for the downpayment and are excited to make an offer. But before you buy a home, there are some very important questions you'll want to ask first. Remember, this will likely be the largest purchase you make in your lifetime; so it's important to do your homework in order to eliminate surprises down the road. The following are some of the most important questions to ask before signing on the dotted line.
What questions should I ask about the offer?
Coming up with questions to ask when buying a home before you make an offer will help you determine if the home for sale is right for you and if the financial situation of the real estate transactions is right for you. This is particularly important if you are a first-time home buyer. Consider the following questions to ask before you buy a home:
How much did the seller pay for the home for sale? The answer to this question will help you evaluate how property values have gone up or down. Additionally, homes in foreclosure are harder to secure financing for until after a period of 90 days.
How much does the seller still owe on the home for sale? If this amount is higher than the asking price, it is likely you are facing a short sale. If it is not a short sale, then the seller will need to bring cash to the closing.
How long has the home for sale been on the market? Knowing that a property has been on the market for more than 60 days will give you more room for negotiation on the price.
How much should I offer for a house for sale?
Whatever offer you come up will be very personal to you and your individual needs. Ask yourself the following questions when figuring an offer amount:
Knowing the right questions to ask can really help you find the best offer price that matches your needs with the real estate climate.
What is the condition of the home?
Knowing the condition of the home will not only help you determine whether or not to buy it, but it will also help you to come to a realistic offer. For example, if you find that the house has structural issues or poor upkeep, you should consider these issues when calculating an offer price. It's very important to have the home inspected by a third party before you buy a home. Some of the more common questions to ask are:
How old is the roof? A roof generally lasts between 15 and 50 years, depending on its materials. If you know how old the roof is, and what type is, you will better be able to determine how long it will last, and calculate that into your offer price.
What type of foundation does the house have--raised or slab? Newer homes usually have slab foundations, but raised foundations allow access underneath the house. This can make electrical and plumbing repairs more accessible and less expensive.
Does the house have insulation? Insulated walls and attics increase the value of the property, especially in colder climates.
When were the appliances and systems last replaced or updated? Also consider how old the appliances are, as some cannot be repaired due to the fact that parts are no longer available.
Buyer Beware: Caveat Emptor or "buyer beware" is a long-standing law that puts responsibility on the buyer to learn of any defects of the home, even if such defects render the home unfit. If you wait until after closing, it is too late. Many jurisdictions do require of sellers a standard of quality, but this can be very hard to enforce. This is why when considering what questions to ask when buying a home, asking about the conditions that will have the greatest effect on the homes fitness is important. The only exception to this doctrine is if the seller intentionally tried to conceal the defects. This caveat applies only to homeowner-buyer transactions, and not builder-buyer transactions.
Implied Warranty of Fitness: This doctrine applies to builder-buyer transactions and places responsibility on the builder/seller to ensure that the property is fit for habitability.
What is a house closing?
The house closing is the final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded. This term can also be used to explain the timing of when the deed/ownership of the house will be transferred to the new owners. The closing usually takes place at the office of someone like a title officer, escrow officer, or real estate lawyer--someone who is licensed in initiating the transaction and purchase agreement.
Do I need an attorney to create a real estate transaction contract or purchase agreement?
Each state varies. In some, attorneys are not usually involved and the parties use an escrow company instead. In other states, each party has an attorney who handles all of the details of the offer and the closing. Be sure to check on your local jurisdictions laws. You can find more information at your states department of real estate or you can ask a real estate broker.
What is seller financing?
Sometimes, if you are unable to get a loan from a commercial lender or bank, the seller will loan you money to buy the home. A seller who wants to spread the income from the home over a long period of time may be more willing to do this. There are two methods of seller financing:
The first method occurs when the seller takes back a mortgage on the home. The buyer signs a promise to repay the loan AND either a mortgage or deed of trust. Both of these would allow the seller to foreclose on the buyer should the buyer default on the payments of the purchase agreement. The seller then transfers the deed to the buyer. Therefore, the buyer has title and can sell the house or refinance it, just like if he or she had obtained a mortgage from a bank or commercial lender (as long as the buyer keeps current on the payments described in the purchase agreement).
The second method is like a "rent to own" contract. The seller keeps the title until the buyer pays off the loan. After the loan is paid off, the seller transfers title to the buyer through a deed. This type of purchase agreement is called different names such as "contract for deed," "contract of sale," "land sale contract," or "installment sales contract". Because the title is not transferred to the buyer until later, the buyer does not have the power to sell or refinance the property, until after he or she pays off the loan and title is transferred. Because of this limited power, this second method is less popular than the first.
Consider Getting a Free Legal Evaluation Before You Buy a Home
If you're buying a home, you're probably well aware that it will likely be the biggest and most long-term purchase you will ever make. It's also a potential magnet for lawsuits and other legal concerns. Before you buy, consider having a real estate attorney evaluate (at no cost) any potential legal issues you may have before they become bigger issues.