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With employment at a record high, reasonable interest rates and the economy booming more people are wanting to buy a home and move. To make the best deal on a home, it helps for buyers to have the answers to these key questions.
1. Why is the seller moving? This is the one question that every home buyer should ask. Unfortunately, it's not always easy to get an honest answer. Sometimes, even the listing agent doesn't know the real reason the seller is selling.
It's important to know why the seller is moving so that you can make an offer that will meet his needs. For example, if the seller needs a cashout sale and cannot help with the financing by carrying back a mortgage, the buyer should know this. However, the seller may want the income that a mortgage provides and could be willing to help finance the sale.
Some real estate agents feel the seller's reason for moving is none of the buyer's business. I strongly disagree. What if a foreclosure sale is scheduled in three weeks? The buyer must be prepared to close the transaction quickly. Or if the home is being sold because of a divorce, negotiations might prove to be difficult and time consuming. When the buyer knows why the seller is moving it can be an advantage for both parties.
2. How much did the seller pay for the home? The recorded price paid is public information in most communities. Smart home buyers want to know this because the price paid affects how much negotiating room the seller has. If the seller bought the home many years ago for a very low price, there is a large potential profit and the seller might be willing to sell below the market value.
However, if the seller bought recently for a high price, there is not much room for negotiation because nobody likes to sell at a loss. However, remember that the purchase price has nothing to do with today's market value of the home.
3. How did the seller decide the asking price? Serious buyers ask the listing agent or their own agent this question. A good agent will gladly prepare a CMA (comparative market analysis) on their computer.
The CMA shows recent sales prices of comparable homes, the list prices of competitive neighborhood homes currently for sale and the expired list prices of homes that did not sell. After analyzing this information, with the help of their real estate agent, smart buyers can quickly figure out if the home is overpriced or underpriced.
4. Has the seller prepared a written Transfer Disclosure Statement on the home? Most states require sellers and the real estate agents to prepare a written disclosure of material facts about the home. Usually, it is given after an offer is accepted. To prevent surprises, a buyer may ask to see this form before making a purchase offer.
When a home is offered for sale "as is" (meaning the seller will not pay for any repairs), the seller and agent must still disclose all known defects. If the defects are severe, the buyer may either not buy the home, or will want a big discount off the market value.
5. Are there any nuisances or problem neighbors? These are subjective questions that will help you find out if you really want to live in the neighborhood. Find out if a noisy or problem neighbor is the real reason the seller is moving. It will be good to know if there are transportation system noises such as airports and railroads, or if there are any future roads planned for the area. These factors can affect the future value of the property.
6. Are there any crime problems or is there any litigation? You can find out the crime statistics from the police department. It is also good to know if the police have been called into the neighborhood for any reason.
Construction litigation is rampant in both condominium and single-family neighborhoods. This can be a hassle and may hold down property values until it is resolved. However, at settlement, the properties involved in litigation are usually restored. Owners may receive new roofs, windows, siding, etc. and there can even be a welcome cash windfall.
7. What past problems have you had with this house? Seller disclosure forms do not require disclosing past problems that have been corrected. There may be some things that have been fixed that you want to know about. For example, major structural problems, plumbing and electrical defects, roof leaks, fire damage and drainage problems have a habit of coming back. It is good to know about these things so you can check out the remedies to be sure they were resolved successfully.
The last thing you want is to find out that the house had major problems from the neighbor next door, after you've moved in.
8. What is the reputation of public schools in the area? Smart buyers check the school rating statistics before selecting a neighborhood to buy a home. But it's wise to ask the seller's and the real estate agent's about the schools.
Nothing adds more value to a neighborhood than fine public schools and nothing can hurt an area more than poor public schools. Sending your children to private schools is expensive, so be sure to check out the public schools during the contingency period.
9. What do you like the most and what do you dislike about this home? This open-ended question gives the seller an opportunity to emphasize the home's best features and worst drawbacks. The seller's answers to these key questions will help you decide if you want to own the home or not.
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