There are so many things to keep in mind when looking at making the largest purchase of your life. In the past few years, as we saw buying frenzies and bidding wars, many home buyers opted to buy homes without having home inspections because owners (arrogantly) would not take offers (contracts) with any contingencies including home inspections and appraisals.
Here are some key areas to look at; including two that many people leave out:
1. The Value – Is this house a good value? Of course, most banks will require an appraisal to protect their interest in the home (their interest is usually larger than yours). If the value of the home comes in at lower than the contract price, you may be able to renegotiate the sale price with the seller by proving that it is not worth what they are asking. If the value comes in higher, then you most likely got a good buy based on the value. When homes are sold without a appraisal clause, the buyer is accepting responsibility for the difference in appraised value and sales price. As an example, if you were getting 100% financing on a home with a contract purchase price of $220,000 and the appraisal came in at $215,000 and you waived the appraisal clause, you would have to pay an additional $5,000 to close the loan or forfeit your earnest money deposit. If you didn’t have the money, the underwriter may even turn you down for the loan.
2. The condition – Is this house in good condition? Perhaps you have heard the phrase “caveat emptor”? It is often quoted in the real estate industry and is Latin for “let he buyer beware”. My recommendation is to always have a home inspection to make sure the home is sound and that there are no deficiencies. Another good recommendation is purchasing a Home Warranty, which will cover most appliances and major systems for the first year or your ownership.
3. Parking (one of the two often missed areas). When trying to choose a neighborhood, make sure you notice how many parking spaces you are allotted, how many visitor spaces exist, do they not allow commercial vehicles, and how far will you or your visitors have to walk to your home from visitor parking or overflow parking areas.
4. Safety (the second of two often missed areas). So many people focus on value and property condition that they forget to inquire about the neighborhood. If you already know the area, then it isn’t a problem, but more often than not prospective buyers end up looking in areas other than they originally desired, and this is often due to price factors. Here are a few ideas for checking out an area:
- Don’t ask your agent about the condition of the neighborhood. First, they may not want to do anything to jeopardize the sale. Secondly, in many areas, the agent is prohibited by law to answer these questions because they are not criminology experts, but most of all, because of anti-discrimination laws. I know this is true in Maryland for a fact as I am a licensed real estate agent in Maryland.
- Check with the local police department. Ask about crime statistics on the specific street you are looking to buy on, as well as the surrounding areas.
- Ask neighbors. This is particularly effective if you know them because they will be real with you as opposed to someone who is biased and is denying that crime takes place in their neighborhood.
- Drive the neighborhood at night. One of my pet peeves is lighting. I like to see a well-lit community. Also, check and see if lots of people are hanging out and about or if it seems to be a quiet area. Not every one is the same; some will prefer communities where people hang out til all hours of the night, and others prefer that it is quiet outside by 8PM. Just make sure you do your own homework.
I hope this helps you as you look for the home of your dreams.
Until next time,
Anthony
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