Saturday, January 21, 2006

Home Buying Basics Part 3

In this part of the series, I continue on tips to pick the buyer's real estate agent, and then explain things I learnt about as part of open home visits and actual buying process.

The questions I listed in my previous blog are not exhaustive and there are several other locality specific questions that one can ask from a buyers' agent. In addition, it is important to know that as a prospective home buyer, it is better to keep options open and not get tied to a specific buyers' agent. It is a very good idea to avoid agents who insist on being the exclusive agent unless this agent has an impeccable record with buyers. It is better to state that you will welcome any leads from any specific agent and close the deal only through them for those specific leads that fructify into something you want. This way you will have many agents working for you and get the opportunity of not only talking to a variety of personalities but also be able to discern which one of these cares more for your needs while getting to see a whole lot of inventory quickly.

In our case, there were agents who were paying scant attention to our needs, and taking us on tours of houses that were either in need of a lot of repairs or had been in the market for a long time with obvious locality specific issues. It took us a while settle down to a couple of agents who were hardworking enough. But, we could never find one that would actually care fully about all our needs. At one point, we were the ones picking up prospective homes to visit, giving leads to these agents so that we could see these houses at odd hours and verify our liking.

Some of the things that may drive your preference for a particular locality may include :
  1. Reasonable Prices in the neighborhood.
  2. Good quality Schools
  3. Safety and Security with low or no crime rates.
  4. Access to conveniences such as grocery stores and other day-to-day fulfillment outlets.
  5. Quality of neighborhood in terms of the residents.
  6. Age of homes in the locality. The older the home, higher the chances for repairs and upgrades, And slightly lower potential in the future for more rapid price appreciation.
  7. Shorter commute to work assuming that the place of work will be steady at least for a few years.

The way to work this out for your purposes is to list down your preferences in an ideal locality and then rank them in order of importance while also making observations on which of these preferences you would be willing to sacrifice in favor of a stong presence of another preference. This will help you nail the localities around which you would concentrate on looking for that dream home.

Now, it is absolutely educational to visit any and all open homes regardless of the locality over the first few weekends just to familiarize yourselves with the terminologies and typical talk that one would use to engage in a conversation with the sitting agent. This is very useful in both locating a good buying agent, and to find out more about what to look for in a home that you would like to live in. Often times, you will find an open home which perfectly fits in to your likes in terms of what a home should be like, but in terms of the locality preferences, it may be just not right! But in the least, you would have picked up an idea or two about the kind of home you would like to live in.

Ask the sitting agent questions on the following lines :
  1. Age of home.
  2. How long have the sellers' lived in the property? If not too long it might be worth finding out why? Is there has been a death in the property within the past two years, this has to be disclosed as per California law and I am sure other states have such requirements as well.
  3. Age of homes in locality and comparable prices of recently sold homes from the MLS (Multiple Listing Service).
  4. Square footage and lot size.
  5. Left-over life of the roof ( as this is typically a vital expense you should be spared of).
  6. Other Disclosure statements including any property inspection reports, termite and pests report, chimney masonry report, etc. which are certifications and analyses from independent professionals giving you an idea about the condition of the house. These reports are fairly long and it is arduous to read them but it is well worth going through them given the amount of money you will lay out either in cash or borrowing for your dwelling. As you read through two or more such sets of reports for respective homes, you will know where to look for obvious gotchas.
  7. Upgrades made by the seller, if any. Make a judgement on the number of areas you will need to upgrade in the house after your purchase and if you have the necessary cash for that.
  8. Is there an outer date by which offers must be submitted.
  9. Are there any offers on the house yet?
  10. Is the seller willing to consider giving allowances for upgrades?
These questions will help you uncover some more details about the property and the sellers' state of mind. This educational process will make you an even better informed buyer compared to the ones who are not inquisitive enough.

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