Buying Considerations
Considerations When Buying
This is probably the single most important consideration to keep
in mind when buying a home. In the real estate business, it is
said that three things count in establishing property value: location,
location, location. Houses may be updated, renovated, and improved,
but neighborhoods and communities tend to retain their basic character
and market value over periods of time. Is the home in a safe neighborhood
where people want to move, buy homes, and raise families? Is there
access to schools, transportation, and shopping? Is the area run-down,
filled with high crime, or noisy? Are people moving away to better
places to live? Look for an area where homes sell quickly and easily.
It's a good sign if houses stay on the market for less than three
months; if it takes six months or more for homes to sell, look
elsewhere. Avoid neighborhoods with a large number of undeveloped
lots, abandoned homes, poorly maintained homes and yards, a large
number of FOR SALE signs, or mixed zoning (commercial and residential
together).
This Homebuyers Tip was excerpted from:
How To Buy A House, Condo, or Co-op, by Michael C. Thomsett and Consumers
Union of the United States, Inc., 1996
Top
Location, Location, Location
Before you are very far into your house-hunting, someone will tell you
the oldest real estate joke that the three most important factors in
the value of a house are (1) location, (2) location and (3) location.
It's true, too. A house costing $600,000 in Beverly Hills might
sell, on a comparable lot in the suburbs of Peoria, for $100,000.
Never in
the history of this country have locational differences been so marked.
Closer to home, you know yourself that a modest home in the most expensive
suburb is worth much more that the identical house in an inner city
neighborhood.
From a buyer's point of view, there are two ways of looking at
this locational preference, which appraisers call situs. The classic
advice
is to buy
the modest house on a more expensive street. Such a house is easy
to resell, and it's value will hold up well, for there are always
buyers
eager for the prestige of that particular neighborhood. Remodeling
or adding to it is possible too because alterations won't push it
out of
the price range for that area.
On the other hand, the most luxurious house on the street won't
ever repay the owner for the money invested. No matter how elegant
it
may be, buyers with money to spend will aim at another, fancier
neighborhood.
In one way, then, an over-improved house represents an opportunity
for the buyer who wants lots of space and luxury features and
isn't worried
about resale value. If you think you will live in the house for
a long time and you like the area, you may be able to pick up
a great
deal
for your money. Where then are the bargains?
- Sloppy houses, otherwise well maintained
- Family situations of stress: divorce, death, illness
- Property
over-improved for it's neighborhood
- The modest house on a prestigious street
The last is, perhaps, not so much a bargain as it is a classic
good investment.
This Homebuyers Tip was excerpted from:
Buy Your First Home Now, by Peter G. Miller Top
Know the Neighborhood
This stage of your market research is done on the scene, driving
or walking slowly through the streets. That's the only successful
way to canvass
a neighborhood.
What, exactly, defines "a neighborhood"? It may be a grouping
of houses around a physical landmark, such as a park, marina, valley,
or hill. It can be as small as one block or large enough to surround
a fashionable shopping area. When you start looking for a neighborhood, think about what you
want in terms of proximity to people and goods and services. Do
you want to be close enough to stores so that you can get there
on foot or bicycle? Do you want a closely knit community where
everybody knows everybody else, or a more impersonal place? A huge
apartment house can be a neighborhood all by itself, where you
nod to people in the elevators for years without ever knowing their
names.
Drive around and investigate neighborhoods in the car, then get
out and walk around those that really interest you. You learn a
lot on foot! Ideally, you shouldn't tackle more than three neighborhoods
in one day, because no matter how good an observer you are, communities
will start to blend together in your mind.
If you see a "For Sale by Owner" sign as you walk, go
into the house and look around. If you seen a place under renovation,
stop and speak to the contractor. Or if you notice an ad about
a neighborhood block association meeting or a house tour, take
advantage of it. You want to educate yourself as much as possible
about the community before you even begin to think of buying there.
It's like marriage - you've got to know the man before you make
the big decision.
What are you looking for as you scout around an area?
Are yards well landscaped? Or are they filled with weeds? Are
there broken-down cars and bikes in the yard? That's a sign of
sloppy homeowners and lack of community concern. .If you're looking
in a city, are there vacant lots? Boarded-up stores? How long have
they been that way? The neighborhood may be in a state of deterioration.
.Do children play in the streets? This could be good or bad. It
might be a sign of a safe community, or it could indicate that
there are no playgrounds or parks available. Cul-de-sacs or dead-end
streets are very desirable for kids, since they mean no speeding
traffic. .Do you see older people sitting on porches as well as
children outside? A sign of good balance in the population. .Are
the residential neighborhoods sprinkled with commercial establishments?
Many homeowners like having a corner grocer, a few boutiques, and
some popular restaurants nearby. Of course, the encroachment of
shopping malls or industry with large parking lots would be a different
story. .How close is the nearest highway? Do you hear a lot of
traffic as you walk the streets? Is it safe for kids? .How's the
public transportation? Is it near enough to be convenient but distant
enough not to be noisy? .Are you too close to the airport or a
railroad? An all-night disco? Noise pollution could be a problem.
.If you're looking in a city, are there iron bars on all the windows?
This sign is self-explanatory-who wants to live in a prison?
Make yourself a list of pros and cons. No one neighborhood will
be perfect, but there will be some whose faults you can overlook
because their positive qualities overcome their liabilities.
This Homebuyers Tip was excerpted from: The Smart Woman's Guide
To Buying And Renovating Real Estate For Profit, by Suzanne Brangham,
Clarkson N. Potter, Inc., 1987.
Top
Homework for Homebuyers
As an added precaution, do a double-check of the services available to
the property you are considering. Ask specific questions of the proper
authorities and accept only specified answers.
- Day-Care, Preschool: Where are nearby day-care and preschool
facilities ? What types of programs do they offer? Will be there
a place for
your child? Which days and what times are available? What are
the costs?
- Public Transportation: Is a bus or some other public transportation
available? Where are bus stops located? How frequent is the
service? Obtain a transportation map so you can determine the
routes you
may be using.
- Recreational Facilities: Will you be allowed to use recreational
facilities in the area? Is your new home in a public or private
recreation district? Are special memberships required? Where
are parks located and what facilities do they have? Are the parks
used
by recreation organizations on specific days? Who takes care
of part maintenance and security?
- Hospital and Medical Services: Where is the nearest hospital?
Are emergency medical facilities closer?
- Police and Fire Protection: How available are police, fire
and emergency services? Is the protection adequate? Will your
home
be protected by a neighborhood watch program? Does the area
have access to a 911 or other emergency telephone number?
- Television Reception: Is TV reception adequate? Is cable TV
available for those who want? Are there restrictions on antennae?
Can you
have your own satellite dish?
- Telephone Service: Will telephone service be available as soon
as you move in? Will a private line be available? What other
telephone services are available?
- Postal Service: Will mail be delivered to the front porch,
to the front curb or to community mailboxes at the end of the
road?
Will mail be delivered daily? Where is the nearest facility
to mail packages, buy stamps, etc.?
- Trash Collection: Is a commercial garbage collection service
available. Or will you have to haul and dispose of your own trash?
If dumpsters
are provided, where are they located?
- Street Maintenance and Parking: Are the roads properly maintained?
Will it be your responsibility to maintain any part of the
roads? What are the parking restrictions, weekdays, weekends
and in emergencies?
Can you park directly in front of your home?
- Water and Sewer: Are water and sewer facilities adequate? Are
there water restrictions?
- Property Taxes: What are the property taxes now and what are
they expected to be? Is a general tax increase expected?
- Special Assessments: Are special assessments anticipated? These
could be made for any number of reasons - paving projects,
water and/or sewer improvements, drainage improvements, schools,
parks,
sidewalks. Are you expected to pay for special assessments
approved or anticipated?
- Zoning Changes and New Construction: Have there been any recent
zoning changes? Are zoning changes anticipated? Is new construction
planned that will change the appearance of or the traffic flow
through the neighborhood?
This Homebuyers Tip was excerpted from: How to Buy Your Home and
Do It Right, by Susan E. Beck, Dearborn Financial Publishing, Inc.,
1993
Top
Condos vs. Houses
- Price. Some people love the idea of condo ownership, and others
hate it. Some who are not at all that thrilled with the idea
may opt for it
for one simple reason - in many places it's a lot cheaper than
a single-family detached home. This will be a difficult fact
for you to accept if the
only condos you are familiar with are developments with names like
Country Club Haven and Rockefeller Manor and have Jags and BMWs
parked in front
of them. Statistically, however, it's true. In some markets the
average sales price of a condo will be 40 to 50 percent less
than the single-family
detached option.
- Variety. Remember that the word condominium describes a form
of ownership, not a type of building. Although the apartment-style
condo is common, there are an infinite variety. They range
from
a very modest apartment building that has been converted to
lavish single-level units built specifically as condos and clustered
around
a golf course.
- Quality of Construction. Several years ago, as the condo concept
became more accepted by homebuyers, a conversion feeding frenzy
occurred. Let's say you owned an apartment building that with
intensive management was barely returning a positive cash flow
for you. An
astute developer shows you how to convert the apartments to
condos and sell them. The profit figures he projects take your
breath
away. You're convinced and you convert. So did a lot of other
apartment house owners.
- Consumer abuses occurred during the period, prompting many
state legislatures to enact very restrictive rules on condo conversions.
One of the biggest complaints had to do with quality of construction. "Paper-thin
walls" was a complaint often heard. A tenant who pays $700
a month for an apartment might be slightly annoyed by the presence
of a noisy neighbor. A purchaser who pays $100,000 for that apartment
as a condo would likely be more than somewhat irritated by that
same inconsiderate neighbor.
- New construction, built specifically as condos, naturally gets
much better marks. For example, when we moved to our present
location, a local builder was just in the early stages of constructing
a
condominium project. We purchased a condo for a relative when
it was in the foundation stage. Each individual unit had its
own interior
walls, separated by an airspace as opposed to a common wall.
It was clear in all the planning and actual construction that
these
units were designed as homes, not as apartments. Since it was
early in the construction process, my wife and mother-in-law
could work
with the builder to customize the condo. It turned out well
for us, and the builder maintains that the nervous twitch he
developed
had nothing to do with the experience.
- Condominium Owners' Association: This is an association of
elected condo owners who control and manage the overall affairs
of the
condo complex, including maintenance of the common areas, such
as the required periodic painting of the exterior as well as
such exotic functions as garbage pickup. Those things obviously
cost
money, and they seem to cost more money each year. You will
be required to pay monthly dues to cover these expenses. By the
way,
if you buy a condo, the amount of these fees will be considered
by the lender when qualifying you for the loan. Condo associations
have some rather formidable power. For example, miss one of
those dues payments and they can put you a lien on your property
- and
in a worst-case situation, actually foreclose on it.
This Homebuyers Tip was excerpted from: The Homebuyer's Survival
Guide, by Kenneth W. Edwards, Real Estate Education Company, 1994. Top
The Older Home
If you want a house with character - perhaps even a history of its own
- consider an older home. Middle-aged houses often reflect the love and
care that have been lavished on them through such owner-added touches
as crown moldings, carved fireplace mantels and built-in bookcases. Often
older homes are also found in neighborhoods that present a more varied
environment using a broader range of architectural styles, as well as
a range of colors and texture of materials. Mature trees, established
lawns and years of gardening often add much to the feel of a community.
With older homes, however, come older floor plans that may not
fit into today's lifestyles. Traffic flow may not be convenient,
master bedrooms may be small, closets almost nonexistent, and kitchens
and baths outdated. If you think remodeling costs will make the
house the most expensive home in the neighborhood, keep looking
or you may lose money in he long run. Your repair bills will most
likely be higher at least in the beginning years of ownership.
And remember that old homes are unpredictable - you never know
when the roof, furnace or water heater will need replacing.
This Homebuyers Tip was excerpted from: Kiplinger's Buying & Selling
A Home, by The Staff of Kiplinger's Personal Finance Magazine,
Kiplinger Books, 1996.
Top
Become a House Detective
Do you live in an old house and want to unearth a bit of its history?
If you live in an older house and are not familiar with its heritage
you might want to consider becoming a house detective, so to speak.
It's fun and educational to find out about the history of your
property. In my college real estate classes, students are required
to select a property, preferably one they have some interest in,
and research its ownership back to 1900. They tell me it's the
best assignment of the course.
Here are some places you can go for information:
First, go to the county courthouse and check the property records.
There will be deeds filed by names of owners, plus there will be
tax records. It will help tremendously if you have the legal description
and tax number of the property you are investigating.
Other sources of information include your local historic preservation
program, if there is one in your town. Also, the state archives
has tax rolls and birth and death records. Census records are available
at regional National Archives centers and some libraries. And don't
forget local libraries that might have city directories, newspapers
,and magazines.
Good hunting. This Homebuyers Tip was excerpted from: TWO HOURS OF REAL ESTATE,
One Minute at a Time, by Phil Hardwick, Quail Ridge Press, 1993.
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Storage Considerations
Do you have property which you want to keep but which you are unwilling
or unable to take with you? Consider storing it. For example, if you
are moving to a smaller home but don't want to sell furniture which will
not fit, you can put it in storage. Large tools and work benches can
be stored if there is no workspace in your new home. Air conditioners
and other appliances which are incompatible with your new home as well
as clothes which are inappropriate for your new climate can also be put
away for your return.
Inspect the storage facility carefully. Ask such questions as:
Is it clean? Are there palates for raising stored items off the
floor? Are
the rugs rolled or folded and is the rolling or folding done by you
or the facility? Are rugs also stored off the floor? Is there evidence
of
any water damage? Are there sprinklers, fire alarms, and security devices?
Find out if insurance is available through the storage facility
or if you will need to get it from your insurance agent.
Clean your property and make any necessary repairs before you store
it. This Homebuyers Tip was excerpted from:
Moving: A Complete Checklist and Guide by Karen G. Adams, Silvercat Publications,
San Diego, 1994
Top
Notify Your Friends of Your Move
If you have children, take pictures of their friends and start a scrapbook.
Collect addresses and phone numbers so your kids can keep in touch at
holidays and other times.
Have your friends pick up any items you are giving away. These
should all be out of the way before you begin packing in earnest.
Collect any items which you have loaned to neighbors or friends.
Return those which you have borrowed. Pick up items on lay away,
anything
being repaired or dry cleaned, film being developed, and any other
similar
articles.
Donate other things to charity. Get a receipt for tax purposes.
Start saying farewell to friends and neighbors. Making just a few
calls a day will give your more time as moving day approaches for
last minute
things.
Give your new address and phone number in writing to your friends
when you see them.
Continue using up your coupons (movie theaters, free passes, green
stamps, pool passes, etc.) Give the rest away. This Homebuyers Tip was excerpted from:
Moving... A Complete Checklist and Guide for Relocation by Karen G. Adams,
Silvercat Publications, 1994
Top
Pricing And Negotiations
Getting the Price Down
It is rare, particularly when dealing with older houses in need of renovation,
that a seller expects to receive the asking price of the house. It is
up to you, the buyer, to pay as little as will possibly be accepted.
Here are some suggestions for your negotiating strategy:
• Exercise the most extreme politeness, even if you don't trust those you
are dealing with.
• Gently but firmly mention the flaws you have found and how much they
are apt to cost you to fix.
• Let it be known that you are looking at other houses as well as this
one.
• Make an offer twice as low as you expect to pay: the seller will surely
not accept your offer, but will make a counter offer.
• Ask the owner to include certain repairs as part of the deal.
• Ask the owner to include in the deal certain items, such as
o Furniture
o Tools
o Appliances
o Restoration Materials
• Ask the owner to pay your closing costs or give you the time remaining
on the insurance policy to reduce your start up costs.
• Explore the idea of the seller's giving you a second mortgage at a lower
rate than the bank is giving you on the first mortgage; if the seller is planning
on investing the profit from the sale, the interest you are willing to pay him
or her may be more than bank or other investment interest will yield.
Watch out for sharpies who just want to make a lot of money on
a house that is worth a little.
To get you through the legal technicalities, hire a real estate
lawyer at an hourly rate. You may find you actually save legal
costs incurred in broker-handled closings. Make sure your lawyer
protects your interests adequately.
This Homebuyers Tip was excerpted from:
Reviving Old Houses by Alan Dan Orme, Garden Way Publishing, 1989.
Top
Encounters With Owners
You will probably meet the owners on one of your visits. As all of you
stand around feeling awkward, watch carefully for non-verbal communication
among home owning family members. Did Daughter blush when Dad said the
tap water was fit to drink? The owners may offer coffee or a soda, but
watch out if you're offered alcoholic beverages. They could be trying
to blunt your powers of observation and resolve. Beer, wine and sherry,
of course, do not count as alcoholic beverages.
Be as charming as you can when you meet the owners. Remember,
your goal is to make them divulge the worst secrets of the house
and then let you have it for a fraction of what it's worth just
because they like you so much. Failing this, you want to undermine
their confidence in the value of their home. Do this by pointing
out obscure problems in the form of compliments.
Example: " I love the way you've handled the space in
the living room. It makes the room look so much
bigger than it
really
is."
Caveat: Never suggest that anything is wrong with the taste of
the owners, even if there are acrylic fur seat covers on all the
toilets and a portrait of Elvis over the hearth with eyes that
follow you around the room.
This Homebuyers Tip was excerpted from: The House Trap, by Alfred
Gingold, Workman Publishing, 1988.
Top
Buyer's / Seller's Market
Depending on the economy, you may find yourself in a buyer's market in
which the buyers get the best deals, or you may find yourself in a seller's
market in which the sellers get the upper hand. Sometimes, you'll find
yourself somewhere in between.
In a buyer's market, there are a lot of homes on the market, and
they may take a while to sell. To sell a house, the seller might
need to offer a really good price, plus additional incentives such
as help with financing. If you're buying a home in this type of
market, you can take your time looking and can usually strike a
pretty good deal.
In a seller's market, houses aren't on the market for long. In
fact, they may sell before they are even listed. Because the market
is so strong, many owners will decide to sell their homes themselves;
you'll see a lot of for-sale-by-owner (FSBO) homes. If you're selling
a house in this market, you're lucky. You'll probably get many
good offers and not need to offer any additional incentives. If
you're buying a house in this market, you may have to work hard
to find a house that you like and can make an offer on before it
is sold...To get your offer accepted, you should be financially
ready (prequalified). Also, don't expect to submit and have accepted
a contract with a lot of contingencies.
This Homebuyers Tip was excerpted from: The Complete Idiot's Guide
to Buying and Selling A Home, by Shelley O'Hara, Alpha Books, 1996.
Top
More Than Asking Price
Dear Edith: After looking at a house a second time, I told
my agent I would like to make an offer on it the next day. That
evening my agent
said the listing agent had told her that there was another "very
good" offer being prepared. My agent suggested I write a contract
immediately before the other one could be presented.
Instead of trying to offer the price and terms I wanted, I was
convinced that in order to have my offer accepted, I should offer
$500 over the asking price. This was accepted by the sellers.
What are the chances that either agent duped me? - E.K.N.
Slim.
It really is sometimes advisable to make an offer for more than
the asking price, particularly when property is newly listed at
a no-nonsense figure.
Of course I can't know whether any particular person is honest,
but consider this: by the time the commission was divided among
listing office, listing agent, selling office and selling agent, "your" agent
probably stood to make about $7 if you paid $500 more. Hardly seems
worth lying about.
Neither one was your agent, by the way, unless you had specifically
hired a buyer's broker. Both were working for the seller. Both
agents had special legal obligations to the seller, including obtaining
the best price for the house. They were also, however, required
by law to deal honestly with buyers.
This Homebuyers Tip was excerpted from: Dear Edith...On Real Estate,
by Edith Lank, Longman Financial Services Publishing, 1990.
Top
Seller's Price Justifications
The "hard" evidence that sellers can use like weapons
to defend their asking price sometimes overwhelms and intimidates
buyers. Be prepared
to let seller's defenses roll off your back without compromising your
position. Willingly, sellers will bring out appraisals, market-value
estimates by real estate agents, computer printouts of homes sold in
the neighborhood, and cost receipts of improvements that have been made.
Be prepared to attack as follows:
An Appraisal: No matter how expert the appraiser, he or she can't put
a price on your home. No one can ever understand all the factors that
are important to you. An appraiser judges what's important to him or
her.
Market-Value Estimate by a Real Estate Agent: Giving free market evaluations
is the way real estate agents get business. It's a device to butter up
sellers and entice the sellers to "come list with me." As such,
agents wanting the listing so badly sometimes give maximum, often outrageously
high, market-value prices.
Computer Printouts of Homes Sold in the Neighborhood: Interesting. Worth
looking over. Usually these lists are limited to homes sold by real estate
companies, not by owners. Sometimes homes on the list are carefully selected
to justify a higher price. Check with a buyer's broker for the true story.
Cost Receipts of Improvements Made: Again, interesting. But not necessarily
suited to your needs. I know buyers who paid more for a home without
the extra finished room. They didn't want to have to keep up the extra
space.
This Homebuyers Tip was excerpted from:
Buying More House for Less Money,By Cecil Lohmar, Probus Publishing
Company, 1990
Top
Escape Clauses
If you feel less than certain that you will be able to go through with
the purchase for any reason, you can - and should - go one step further.
Insist on adding an 'escape clause' to your offer. This allows you to
back out of an agreement without incurring any penalty or disadvantage.
This clause should be already in the 'Offer and Acceptance' form supplied
by your attorney or buyer's broker. If it isn't, ask him how to add it.
Such a clause might state that you will go through with the deal,
but only if certain other things happen. For example, you'll complete
the purchase provided your partner or mortgage lender or attorney
approves it. Remember, this offer document is not the full Sales
and Purchase Agreement. That will be drawn up later by your attorney
or broker (or approved by him) if your offer is accepted. And,
it will spell out in detail the conditions attaching to the purchase.
The escape clause (often called a 'contingency' or 'contingency
clause') in the Offer and Acceptance document serves only one purpose,
to allow you the right to withdraw without any cost or further
obligation to you. This is a matter you should cover in your preliminary
talk with your attorney or buyer's broker. At the same time, seek
advice on how to go about putting a deposit on the home you select.
And keep in mind that an offer to purchase can be withdrawn at
any time prior to acceptance, with or without an escape clause
.
When it comes to handing over money, my own approach is one of
caution. Even when protected by an escape clause, I believe it's
wise to give the agent the smallest possible deposit (sometimes
called an earnest money deposit' or a 'good faith' deposit). This
is the money the agent looks for before he submits your offer.
If you decide later to pull out of a deal, a properly worded contingency
clause can guarantee you will get your money back. Without such
a clause, you could forfeit your entire deposit.
This Homebuyers Tip was excerpted from: Not One Dollar More!,
by Joseph Eamon Cummins, Kells Media Group, 1995.
Top
Buyer's Mistake Number 79
" We Fell in love with the house and just HAD to have
it."
Lesson: Keep your love to yourself. Put your options on the table.
In his best-selling book You Can Get Anything You Want , Roger
Dawson, the world-renowned negotiating expert, tells how a negotiation
slipup cost him $30,000 when he was buying his family's present
home. Roger writes that one day while teaching his daughter to
drive in the secluded hills of Southern California, he spotted
the house of his dreams. Everything about the house was perfect,
he says, and it was for sale.
Posing as a reluctant, if not altogether indifferent, buyer, Roger
relates how he plotted his negotiation strategy - only to see it
evaporate when his wife and daughter returned to look at the house
without him. They oohed and aahed over every feature, and by the
time they were through with their tour, "they had demolished
my reluctant buyers plan," says Roger.
It also didn't help matters when his wife told the sellers Roger
really thought their house was wonderful. At that point the sellers
knew the Dawsons were hooked. With a ticket price of $15, Roger
says many people think a tour of Hearst Castle at San Simeon is
expensive. But he calculated that one house tour by his wife and
daughter cost him $30,000.00.
When talking with sellers, you've got to walk a fine line. Yes,
you want to show interest, develop a cooperative, problem-solving
attitude, and prevent critical remarks that may offend. Yet you
can't go overboard with lavish praise. Nor do you want to tell
yourself, "This is the perfect house, we've simply got to
have it."
In other words, don't shut out other options - either in your
own mind or in the eyes of the sellers. When the sellers believe
you've eliminated other houses from consideration, they'll naturally
use that information to bolster their own position. Should you
tell yourself, "Nothing else will do," you abandon the
strongest negotiating power any buyer has - the willpower to walk
away from the deal. Sometimes emotions do get the better of us.
But keep in mind that once you relinquish your walk away willpower,
you might as well hand the sellers a blank contract and let them
fill in the numbers.
This Homebuyers Tip was excerpted from: The 106 Common Mistakes
Homebuyers Make, by Gary Eldred, Ph.D., John Wiley Sons, Inc.,
1994
Top
Inspection and Construction Considerations
Home Inspecation
Frequently Asked Questions
The real estate sales market has toned down dramatically since the 80’s,
yet now in the late 90s there are clear signs of renewed home buyer activity
and care in the purchase of homes.
Home inspectors have reported a significant increase in the number of
pre-purchase inspections, according to the American Society of Home Inspectors
(ASHI), the most respected national organization of independent home
inspectors.
What are the most common house problems buyers can expect to
find?
In homes 20 years and older, ASHI experts say that roof shingles, electrical
wiring, and surface water drainage systems are the items most commonly
cited on inspection reports as needing repair or modification.
In new construction, inspectors frequently find water seepage into basement/cellar
or crawl space, inadequate attic ventilation, poor roof construction,
and substandard masonry and finish work.
Are there any environmental hazards present in the home?
In response to a growing awareness of the dangers posed by certain substances,
such as radon gas, asbestos fiber, and urea formaldehyde foam insulation,
many consumers are paying extra to have special tests performed to make
sure their new home doesn’t pose a health hazard to them and their
family. Although a standard ASHI home inspection does not include environmental
items, many home inspectors offer environmental assessment as an optional
service, or recommend further evaluation.
What is the difference between a home inspection and an engineering
inspection? Which is appropriate for the home buyer?
Considerable confusion surrounds this question, particularly since in
some areas, home inspections have been inadvertently referred to as engineering
inspections or evaluations, and engineers sometimes perform home inspections.
But the two, according to home inspection and engineering authorities,
are actually quite different.
Engineering evaluations are usually specialized by discipline (such as
chemical, structural, electrical) and involve exhaustive scientific measurements
and calculations for confirming the design of the systems. Home inspections,
on the other hand, tell buyers what they really need to know: “what
is the condition of the home today?”. The home inspection, performed
by a professional engineer (P.E.) or a non-engineer professional inspector
does not involve engineering analysis of the original design, but deals
instead with the in-service operation or failure of a home’s systems
and components, as well as the type of maintenance that has been and
should be performed. It is based on established criteria of performance
and training specific to the home inspection profession.
How does one know who is qualified to conduct home inspections?
State agencies, which are typically responsible for regulating professional
activity, have not undertaken to license home inspectors, except in Texas.
Home buyers must therefore carefully review an inspector’s background
and credentials to determine if he has the appropriate training and professional
ethics to perform home inspections.
This Homebuyers Tip was excerpted from:
Banker & Tradesman, May 1997
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Inspections: Boefore or After?
Which is better: to have the home inspected before you make an
offer, or after? Most commonly, you will order an inspection
after you know
that your offer is acceptable to the seller. If the price you are prepared
to pay seems to have no chance of buying the home, paying for an inspection
($250 - 350) is a waste of money. That’s the conventional thinking
and it usually is sound.
However, homebuying is a flexible undertaking and much is dictated
by the particular circumstance in which you find yourself. It isn’t
always best to leave your professional home inspection until your offer
has been accepted . You could have this carried out between offers,
while the negotiation is still in progress. Perhaps before you
make your second,
third, or final offer when it can be the catalyst in making the deal.
Naturally, any offer you make before the inspection will carry a contingency
clause stating that you will go through with the deal only if the results
are satisfactory to you.
A later inspection can sometimes give you even greater advantage
than an early one. Let’s say you have reached agreement with the seller.
You have negotiated well and have won a good reduction in the selling
price. The seller’s anticipation is heightened. He sees the
deal as a done thing. He is glad the whole process is over. Then,
if the inspection
reveals problems, it is much harder for him to back out. He is far
more likely to agree to a lower sale price or, at least, pay for
the repairs
or replacements that are needed.
If you are a first time buyer or new to negotiating, it is probably
better to negotiate a price first. Then, have an inspection carried
out and
try to get the seller to pay for any work you consider necessary
or to agree to a lower price. This Homebuyers Tip was excerpted from: Not One
Dollar More!, by Joseph Eamon Cummins, Kells Media Group, 1995.
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Condo Quality - A Major Concern
The quality of any property you are considering should be a major
concern, but the quality of construction of a condominium complex
is especially
important. There are several reasons for this. First, of course, is your
health and safety. Also, as a homeowner, you will be responsible for
the costs of repairs. Even if there are many homeowners, the cost to
each may be substantial. The cost of the hazard insurance carrier by
the association is based upon the construction quality of the building.
Another important consideration has to do with future financing. Lenders
can pick and choose those properties on which they wish to make loans.
If the condominium complex is anything but a prime property, it may be
very difficult, perhaps impossible, for a buyer to get a new institutional
loan when it’s time for you to sell. This may hurt your attempts
to sell your home for the greatest profit.
Because most people do not understand the construction of large
buildings, they choose to be unconcerned with quality. Do a careful
inspection of
the entire complex before writing an offer an a condominium. This Homebuyers
Tip was excerpted from: How To Buy Your Home and do it right by Sue
Beck, Dearborn Financial
Publishing, Inc., 1993.
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Home Warranties
Guarantees, promises, and protections provided by one party to
another. In real estate contracts, there are usually warranties
regarding the
condition of the appliances and certain fixtures. New homes often have
extensive warranties covering not only fixtures and appliances, but the
overall structure of the house as well. There can be “express” (written)
warranties, ”implied” warranties (guarantees that the parties
intended even though they may have stated them specifically in the contracts),
and “imposed” warranties (guarantees created, for example,
by state law).
This Homebuyers Tip was excerpted from:
Successful Real Estate Negotiation by Peter G. Miller, Harper Perennial,
1994
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Sales Models - Use Caution!
Here's an interesting trivia question: What's the number one reason buyers
of new homes cite for not recommending their builder?
If you said the quality of the home, guess again. Sixty-eight
percent of new buyers said the humiliating sales process of their
builder soured them on the whole experience, according to a Minnesota
marketing research firm. And who can blame them? Whether you're
in Maine or Oregon, walk into any new home community and the sales
pitch is frighteningly similar. Even Builder Magazine, the official
mouthpiece of the National Association of Home Builders, recognized
this problem in a recent article and described the typical sales
process like this:
"The hostess or sales associate greets the customer at the
sales office door. Then, like it or not, the prospects are led
to the topo table (the office's centerpiece) to get a bird's-eye
view of the community, hear a spiel on the project's benefits and
(to instill the first twinges of urgency) see all the little red "sold" dots.
Next, the buyers are delicately grilled ('prequalified') about
their housing needs and pocket depth, then steered to the wall-mounted
floor plan the sales staffer judges they'd like best. Then the
prospects are released (or if it's a slow day, accompanied) to
the models."
"Back from the models (assuming they didn't climb over the
model trap's fence), the prospects are intercepted, steered to
the wall-mounted 'builders' story for another canned spiel, then
directed (or accompanied) to a lot. Finally, the sales associate
eases the prospects into a cramped closing room to 'work up some
numbers'- and to extract a 'be-back' promise or contract."
Sound
familiar? The only thing missing is a soundtrack blaring out Janet
Jackson's "Control." (I want to be the one... in control!)
That's what it's all about, after all-manipulating you both physically
(why do you think the models with the fence attached is called
a "model trap"?) and psychologically. Builders are control
freaks, who think the only way to weed out tire-kickers is to treat
all buyers like a side of beef that's waiting to be processed. There are some ways you can take control of the sales process
as a buyer. Here are some tips:
•Do your homework before you step into a model. Don't rely
on the canned "builder's story." Instead research the
builder at the local library- all public builders will leave a
trail of newspaper articles, both good and bad.
• Ask for the price lists and brochures up-front. Instead of being led
by the nose through the builder's model, insist on seeing these documents first.
That way you can tell if you're truly interested or merely wasting both your
and the builder's time.
•Shop around. Not all builders are blind to this problem-
some actually have tried to make the sales process easier to swallow.
For example, at willow lake in North Aurora, IL, United Development
has life-sized plans on waterproof tarps- buyers can walk through
the plans to get an idea of different layouts or to merely figure
out how large that closet really is. Other builders are making
their models more interactive, with freestanding displays of plumbing,
windows, and other details. By revealing what's going on behind
the walls, you can get a better read on the builder's quality.
This Homebuyers Tip was excerpted from: Your New House,by Alan & Denise
Fields,Windsor Press, 1996
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Up On The Roof
The roof is the advance guard of the house. It engages the elements first
and provides the most fundamental protection from them. As such it
is always a source of anxiety and concern. If it's old, you wonder
when you'll have to replace it. If it's new, you wonder when you'll
have to repair it. Every roof needs adequate runoff. You can't just let the water
that is ready to fall off your roof go straight over the sides.
First of all, the random dripping would keep you up and drive you
crazy. Then all the water would end up in your basement, or flooding
the area around your crawl space or foundation. To ensure proper
runoff, all roofs must have gutters that drain the water to leaders.
Check the southern exposure of the roof. This side gets the worst
beating from the sun's rays because of the rising and setting of
the sun in the south. (Well, actually it rises in the east and
sets in the west, but you'd never know it to look at the southern
exposure of your roof.)
Trying to decide which way is south will probably keep you too
preoccupied to ask what the roof is made of and whether or not
it keeps the weather out (should you buy, you'll find out when
it rains). The most common roofing materials are:
Slate: Unbelievably expensive, breaks easily, requires specially trained,
dying breed of craftsfolk to repair or replace.
Asphalt Shingle: Smells funny when wet, cracks in cold, retains heat
in summer.
Wood: Leaks, smells, rots.
Metal: Bends, rusts, corrodes.
If price is no object, you might consider a thatched roof, certainly
the cutest roof of all, especially if you don't mind living under a
fire hazard teeming with mice and spiders. From a distance, a house
with a
thatched roof looks like Don King. This Homebuyers Tip was excerpted from: The House Trap, by Alfred
Gingold, Workman Publishing, 1988.
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