11 Things you might not have thought about
1. Look Left, Look Right, Then Look Again. Your contract contains a clause granting you a certain number of days for an inspection period. Do not just schedule a home inspection then sit back and wait for it to happen. There are numerous other considerations that should be on your radar during that time; check out the property’s insurance claim history, neighborhood traffic patterns, surrounding communities, visit the local police station and ask for crime statistics, visit schools, locate hospitals, check out parks. Is the proximity of a sex offender important to you? There are web sites for that. Is there an airport nearby? If so, what are the landing and take-off patterns? Is the property adjacent to a business that might have night or early morning deliveries? Any of these factors and so many more, might be a deal-breaker for you. Your inspection period allows you to inspect anything and everything before continuing with your purchase.
2. Stride, Don’t Ride. Take a leisurely walk through the surrounding community at least twice, once during the day and once on a weekend evening. This will give you a good sampling of ordinary neighborhood activity. You might even chat with an informative neighborhood resident along the way.
3. Be The GPS. Drive your route to work and back home, preferably at your normal hour. Map out your course to shopping and restaurants, activities, schools, medical facilities, anywhere that you might frequently travel. You can do this with a GPS app on your phone, some will even give you traffic statistics for various times of day, but you’ll get a much better feel for your average commute if you do this yourself.
4. The Past is Not Always in the Past. A CLUE report is generally required and obtained by your insurance company prior to issuing a policy on the new home. You cannot obtain a CLUE yourself but you can require that the current homeowner provide one. The report includes dates, type and extent of damage and cost of repairs handled through insurance claims on the home. This could be invaluable in determining whether any hidden issues may exist or even the likelihood of future loss. CLUE reports also assess an insurance applicant’s claim history and insurance companies may consider both reports when rating your new policy.
5. Your Life is an Open Book. There are financial details that you’ll need to discuss with your lender. These may include variables in closing costs and pre-paid items, rates and loan programs. Be prepared to provide comprehensive financial documentation and a fair amount of personal data to your lender. They must adhere to specific government and industry requirements that are not negotiable. These requirements may feel intrusive but after all, consider how much money the lender is trusting to your care.
6. This is an Investment, Treat it That Way. Consider carefully, your up-front costs. Whether or not you complete the transaction, this is cash that will need to be readily available:
- Earnest Money – a deposit submitted with your offer to purchase. This will either be applied to your down payment or returned to you at closing. Something to note: If you willingly and unfairly breach the terms of your contract resulting in a dispute, and you are found at fault, it is possible that the earnest money deposit could be awarded to the seller.
- Home Inspection – usually within the first 10 days after contract acceptance. You might also be required to have termite, roof, radon, or other inspections. You may request additional, optional inspections such as pool and HVAC.
- Appraisal – your lender will let you know when this is due, usually prior to the actual appraisal date.
- Repairs – you should have a reserve of cash on hand in the event that repairs are required by your lender or appraiser but the seller is either unable or unwilling to complete them. If you elect to proceed these things will need to be addressed.
7. Only if The Price is Right. Possibly one of the most critical considerations will be your offering price. Your agent can provide not only the selling prices of similar homes in the area, but terms (foreclosure, short sale, estate sale, contingencies, etc.) under which they were sold and the condition of the sold property in comparison to the one you are purchasing. The value that an appraiser arrives at will undoubtedly take these factors into consideration so you will need to do the same. Keep in mind that the information you may find on line or in public tax records typically does not include condition of the home or terms and circumstances of the sale.
8. Ever Get the Feeling That Someone is Watching You? If the home you are purchasing is located in an HOA or under the management of a Home Owners Association, or the community is subject to CC&Rs (Covenants, Conditions, and Restrictions) be sure you obtain a complete copy and REVIEW THEM prior to your inspection period deadline. Imagine your surprise when you arrive with a boat or an RV that you’re not allowed to park in your yard, or a beloved family pet that is on the restricted list. HOAs or covenants can restrict everything from your landscaping to the flags you display so I can not stress this enough… READ THE REGULATIONS!
9. Do Judge a Home by Its Title. Understand your title report – the title company, attorney, or settlement agent that is handling title (history of property ownership) and title insurance for your transaction should carefully review these documents to insure the ownership trail is traceable, there are no encumbrances, and the current title is clear. They will prepare an abstract (summary) of title. They will also be sending a copy of their findings to you. It never hurts to double check this information and don’t be embarrassed to ask questions. . I can tell you from experience that a discrepancy in title can take years to clear.
10. Be Aware, Be Very Aware. Note market conditions before requesting seller concessions. Different market conditions favor different contract terms. The real estate atmosphere has never been more volatile than it is right now. In recovering from the infamous downturn, the market has bounced back and forth between the so called “seller’s market” and “buyer’s market” with periods of everything else in between. You need to clearly understand the attitude of the market in both your preferred area, and designated price range. When you are unaware of current trends you risk paying too much by neglecting to request seller contributions, or losing out on the home you really want by demanding concessions that simply won’t fly.
My thoughts on the media: Historically the general news media is 3-6 months behind actual real estate market activity. By the time they’ve gotten wind of and reported the story, the market has usually changed.
11. You Need to Be Able to Talk the Talk. Negotiating repairs can be tricky. Some of the items your Home Inspector will make note of are safety or functional concerns. Depending on the type of financing you have applied for, some of these things must be repaired, others may be deemed cosmetic. Particular mortgage products (Conventional, FHA, VA, USDA, etc.) require that specific things be in working order or meet certain standards. Generally (not always) your home inspection takes place before the appraisal so you’ll need to be aware of these requirements in advance. Next, separate the items in the Home Inspector’s report that seem to raise a red-flag for you, from those that are easily remedied after you move in. Often a seller is aware of a property’s defects but has lived with them for a long time and feels that you can too. This is where the strength of your negotiation skills will matter.
Additional Resources for Home Buyers
- Buyer’s Frequently Asked Questions
- Being Prepared
- For First-Time Buyers
- How Can I Help You?
- Do You Need a Buyer Agent
- Getting Pre-Approved
- Understanding Your Credit Score
- How Much Should I Offer?
- Offers and Purchase Agreements
- Who Pays for What?
Bill Salvatore Realtor / Veteran Arizona Elite Properties 602-999-0952 eMail: firstname.lastname@example.org