For many people, purchasing a house is the largest purchase they will make in their lives. Additionally, as an investment, buying a home will also represent the largest potential portion of a homeowner’s financial portfolio. As such, homes are typically not purchased on a whim. Instead, people carefully consider a variety of factors to ensure their investments are protected.
Additionally, to ensure home buyers are protected, sellers must disclose everything about the house–that they know of. Consequently, the process for buying a house is complicated and requires the involvement of a variety of people, such as appraisers, agents, lenders, and title agents. Because this type of purchase is so important and complicated, as a buyer, you must consider things that are both directly and indirectly related to the house you are interested in buying.
- Home condition
Due to its nature as an investment, the house of your choice will require a qualified inspector to assess its condition. The inspection should cover the largest aspects of the house, such as the roof and the foundation. However, it should also cover the structural elements, such as the wall, ceiling, and floor joists. Because these types of structural elements are often hidden, the inspector should look for any signs of recent cosmetic construction that could have been used to potentially hide problems. Other cosmetic repair work, such as drywall repair, can indicate potential leaks. In the bathroom, recent tile work can also be an indication of ongoing leaks or mold problems.
Although inspections of the electrical system are common, you must actually request that the plumbing system be inspected. Plumbing inspections are neither common nor required. As such, plumbing problems are one of the most commonly reported problems home buyers discover upon moving in. The rule is this: do not buy a house unless you have the plumbing scoped by a licensed plumber.
The neighborhood will provide a lot of signs as to the potential of your home to rise or decline in value. These signs can be disrepair, sprawl, or disarray. Although realtors will look at comparable homes and provide information about their recent sale prices, this information is typically provided for the seller. As a buyer, you should conduct online searches and determine the prices homes in the neighborhood have brought. Additionally, you should conduct drive-by weekend, weekday, and night-time inspections of the neighborhood. Doing so will let you know how noisy, safe, or comfortable the neighborhood residents are.
Additionally, you should never purchase the best house in its class. Attempt to purchase a home priced within the mid-range of houses with similar features. Doing so will give your house an opportunity to increase in price.
- Tax history
Of course, the tax history will allow you to determine the history of the taxes and what you can expect to pay. More importantly, it will give you an indication of the overall consistency in the house’s official value.
- Buyer’s Agent
Your ability to purchase will be greatly improved if you retain a buyer’s agent. In the same manner that a seller’s agent will represent the seller’s interests, a buyer’s agent is contracted to represent the buyer’s interests. As such, the agent will be honest with you about the house’s positives as well as its negatives. Just as important, they are contractually obliged to negotiate in your favor.
If you do not retain a buyer’s agent and simply work with the listing agent, you will have to understand that this agent works for the seller. He or she does not work for you. As such, that person will negotiate for the seller and make recommendations that benefit the seller. Any advice the listing agent offers your regarding the house is intended to work in the seller’s interest.
In terms of hiring a buyer’s agent, the most important thing is communication. As such, you should ask if the agent uses client relationship management software (CRM). CRM software helps agents handle multiple clients and keeps them organized. It is basically a digital secretary. If the agent does not use CRM software, he or she is probably trying to adhere to too tight a budget and take on too much unrealistic responsibility. However, if the agent uses CRM software, such as Arosoftware RealEstate CRM, he or she will not miss appointments or phone calls and will always be prompted to answer your emails in a timely fashion.
One final note regarding buyer agents. When retaining a buyer’s agent, you will need to understand that you are contractually obliged to purchase a house via the agent’s services. Even if you purchase a house during the term of the contract and do not use the agent, the buyer’s agent is still the legal representative. As such, he or she will still be able to claim the contractually designated commission percentage.
This criteria is simple. School quality is one of the most important factors in terms of human value and property value. Award-winning or nationally known schools will help maintain your property value.
- Hidden dangers
In terms of hidden dangers, the seller is contractually bound to notify of any termite damage. However, you should always insist on a termite inspection. Even if there are no current signs of termite damage, a termite inspection will reveal previous damage or potential damage in the form of underground nests.
- Resale value
Prior to purchasing a house, you should review the previous sales history of the house as well as the sales histories of surrounding homes. The trend should match national averages. Additionally, to help your home maintain or increase in value throughout the duration of your stay, you should always pay asking price. The difference between asking price and slightly below asking price is negligible in terms of monthly payment. Additionally, your home is considered a “comparable” in relation to other homes in the neighborhood. If your home sells for more now, other agents will see their comparables rise. When you go to sell your home, your agent will then see that those neighborhood comparables have risen over the years.
Basically, paying asking price helps create a slight, self-perpetuating cycle of raising property values. If you negotiate lower asking price, other home’s comparables (which includes your house) do not rise, so homes are not worth as much. Consequently, when you sell you home, your comparables (those previously listed homes) will not reflect raises in value, so your house will not command as high of a price.
Trees help with cooling costs, and they offer value to the home’s overall curb appeal. However, they also are potential risks during storms because branches can crash down upon vehicles and homes. Additionally, roots can damage plumbing pipes or foundations. Finally, ash trees are often the target of boring beetles. If you are shopping for homes with trees, ensure you are able to maintain your the health of your trees. Additionally, ensure the seller’s disclosure forms indicate the known state of the property’s trees.
It is often a benefit if your can operate a home business out of your home. However, you need to check with city zoning laws to determine if home businesses are permitted. Other zoning laws that might impact your happiness have to do with the height of fences. Some laws allow full-size privacy fences while others only allow fences up to 48 inches in height. Finally, you should do a check of current and planned construction in the area as construction could either positively or negatively impact your property’s value.
- Mortgage rate
Your mortgage rate will be one of the most important aspects of your home. It will determine your monthly payment and your ability to save money. Moreover, it will be with you through the duration of your work life as you pay off your home. As such, you should ensure it is low enough that you can absorb any changes in your employment. Additionally, ensure that it is non-adjustable, so you are not hit with higher mortgage rates after the initial introductory rates expire.