If you believe House Hunters, the home buying experience goes something like this:
1. Visit home in ideal neighborhood.
2. Check for granite countertops in kitchen.
3. Check also for double sinks in master bathroom.
4. Make jokes about how your partner or significant other will not get any closet space.
5. Make an offer.
6. Move in!
In reality, the home buying process is often a lengthier and more complicated process than what we see on TV. And that is a good thing. Why? Because buying a home is one of the most important financial decisions you are likely to make and your choice should not hinge (only!) on countertops and double sinks.
Here, we take a look at five essential questions that any prospective homebuyer should ask before making an offer on a particular home:
What are Similar Houses Selling for?
Before making an offer on a home, it is wise to explore what comparable homes in the area have sold for recently. (In real estate parlance, these are referred to as “comps”.) It is only through looking at comps that you will be able to understand whether or not the home’s asking price is reasonable. Your agent will be able to pull together a list of comps for you easily and should be able to explain what the comps suggest about your prospective home’s value.
What’s the story with this house?
It’s easy to fall in love with a house, but it is hard to stay in love with a house that needs a surprise new roof or turns out to be riddled with asbestos. To avoid major buyer’s remorse, a home inspection is key.
Here are a few things to keep in mind:
- Nowadays, many sellers will have purchased a home inspection before they put the home on the market. Make sure you read the inspection rather than simply receiving a run-down of highlights from the selling agent.
- If the seller has not already had the home inspected, commissioning an inspection from a trusted & accredited home inspector is key. Your agent will likely have recommendations for a good home inspector.
- Some buyers will forego the option of requesting a home inspection in order to strengthen their offer to the seller in a hot market. Before going this road, it is wise to talk about the risks associated with purchasing a home without having it inspected with your agent.
Is Documentation Available for the Garage Door/Hardwood Floors/etc.?
Rarely do buyers think to ask for something as mundane as a user manual for an air conditioning system, or the warranty on a roof. However, having these documents at hand can save major headaches later, should something go wrong.
Below are a few common items that it pays to ask for information about before you close on a new home:
- Warranties on major appliances and home systems such as heating & cooling units, and windows.
- Purchase information and passwords for alarm systems, keypads, and garage door openers.
- Instruction manuals for any of the above.
While your seller isn’t required to leave these for you, most should have no problem doing so, especially if the sale has been amicable. If, however, you realize you are missing some key documents after you get the keys, a few phone calls to a dealer or service provider can point you in the right direction.
Will you Need Flood Insurance?
Do you know if your prospective home lies in flood plain? If so, you will likely be required to carry flood insurance. This raiser your insurance costs and is something you will definitely want to research.
FEMA provides maps detailing flood plain areas and these are worth exploring. It is also important to note that flood plains are assigned different ratings depending on the level of flood risk. This rating will impact the cost of your flood insurance policy.
Once you understand that a home is in a flood plain think about the following:
- How much more each month will flood insurance cost you and can you afford this?
- Are you comfortable living in a home that is in a flood plain?
- Are there comparable homes available that are not in a flood plain?
What are the Monthly Utility Costs?
No one likes paying utility costs, but unless you are planning to live off the grid, chances are you’ll be sending off those bills to the utility companies each month.
To gauge how much utility costs will impact your bottom line, consider asking the seller for copies of their utility bills during peak month. (Depending on where you live, peak months could be the cold months or the very hot summer months.)
Before you let high utility bills scare you from a property, however, it makes sense to think about whether or not some little fixes could save you big money down the road. For example, adding weather stripping around windows and doors helps prevent drafts, as does insulating light switches and outlets. If there is room in your budget to upgrade to energy-efficient appliances, you can realize savings there as well.
Whether this is your first foray into homeownership or you are an experienced buyer, purchasing a new home is an exciting time! And while tracking down user manuals and examining flood plain maps is no one’s idea of a good time, spending time researching these things can save you major headaches (& wallet aches!) in the months and years to come.