Monday, April 9, 2012

Buying Real Estate - What You Need to Know and Ask Before You Make an Offer


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Buying your first home is probably the biggest decision you will ever make in this life. Do you know what to look for? What questions need to be answered before you make an offer to purchase? What your agent doesn't have to tell you, can make your dream of owning your own home a nightmare. Do you know who your agent really works for?

First I would like to state -- never sign any legal document without reading it thoroughly and having a thorough understanding of the terms and conditions of said contract. Never sign documents with blank fields. All fields should be filled or voided as N/A (not applicable) prior to signing, to avoid document tampering. Always get a copy [right away] of any and all documents involving your signature. You are entitled to this by law.

Most home buyers are wise to seek financing options before going house hunting. Pre-qualification with a reputable lender will prevent getting your heart set on a home you cannot afford. This will tell you the price range of homes to look into that you can afford. Remember not all lenders are the same either, so shop around to get the best rate and terms.

Here are some [not all] questions every buyer should have answered and other important issues to consider before making an offer to purchase:

Is the Title Clear and Clean: A Title Insurance Policy** should always be a prerequisite to purchasing any Real Estate. This insures you against any defects with the title; and that it is either free of liens and judgments, or the policy issuer will correct any defects at their expense, if any arise.

Is there any record of prior damages to the structure: Most agents will plead ignorance to any prior knowledge. Usually they will be telling the truth, but what you might not know - they make sure not to explore the topic of prior damage, or outright go out of their way to avoid obtaining any knowledge concerning prior damage. Disclosure laws require them to give you any information they possess or are aware of, thus they don't want to know and discourage the seller from sharing information of a negative nature.

Termite Bond**: I would never recommend passing on a termite bond, regardless of the Termite Inspection Report of 'no visual' damage. Considering the costs of future repairs from termite damage, a Termite Bond is worth its weight in gold. I highly recommend you purchase one.

Who is the Agent working for: Federal Law requires they inform you of your options in dealing with an Agent, Agency or Broker firm. Don't be so quick to decide and sign any agreement until you have all your questions answered and you fully understand what each option means - legally. Do they work for you, the buyer, exclusively? Or do you share representation with the Seller? Or do they represent the Seller exclusively?

Is there a Home Warranty** for the buyer: Know what the warranty does or doesn't cover. Some policies might be cheaper, but offer less coverage and have several exclusions and conditions.

Make it a point to know the build date and history of the property you are considering. Your local records department or recording office will have this information. This can affect many things including but not limited to: Purchasing Homeowners Insurance, Flood Insurance Rates, Taxes, Easements and Encumbrances, Restrictions of use, Zoning variances, and whether the Builder or Developer is reputable or still in business.

Is the property up to current building standards and codes: Having an independent home inspection conducted prior to [and conditional to] finalizing of said sale is money well spent. This can literally save you thousands of dollars. Hire a professional only after verifying their good standing with your Local Better Business Bureau. Don't depend on the listing agent or real estate agent for this task. Recommendations should be considered only after verification of expertise.

Listing or Asking Price**: Never offer the full asking price in your initial offer to purchase. Depending on the particular property, I have offered less than fifty percent of the asking price. There are numerous considerations to take into account when negotiating a real estate deal. Make sure your "Good Faith Estimate" includes all items pertaining to your individual proposed offer to purchase.

Ask and get accurate answers to the demographics of the neighborhood and surrounding area: Is it a high crime area? If so, what type of crimes are prominent. If you have small children you will want to know if there are any registered sex offenders in the neighborhood and surrounding areas.

Other considerations to take into account:

*Is there a problem with noise from trains, planes, or high traffic? *Have you met the neighbors bordering the property in question? *Is the school district a good one and what are the policies of those schools? *Is the location central to your particular needs? Convenient shopping and business needs? *What about response time from local police and emergency medical services?

NOTE: Items with a double ** are negotiable closing costs between the seller and buyer.

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