Buying a house can feel like an audition: You’re brushing up your credit score, getting paperwork in order, writing a compelling offer, and generally presenting yourself as an attractive buyer.
But you’re also entitled to ask some tough questions of the lender, the real estate agent and the seller. Here are some important ones:
What are comparable houses selling for?
Ask your real estate agent to look up some “comparables” for you or check them out for yourself on Zillow or Trulia. Comparables, or comps, are the prices of nearby homes of a similar age, size and condition. You might also be able to receive the highs and lows for a particular area, which will help you determine the right amount to offer. Before your mortgage is approved, an appraiser will analyze comp data in detail, so it’s smart to get ahead of the game and avoid coming up short on your appraisal.
Are there foreclosures in the area?
Even if your property isn’t a foreclosure, nearby foreclosures can significantly affect property values. Ask whether previous sales were influenced by foreclosures in the area. In some cases, a high rate of foreclosure can lend itself to a great bargain if you’re willing to wait until the neighborhood turns around and new owners move in.
How flexible is the seller?
You probably won’t meet the seller if you’re both using real estate agents, but your agent can help you get an insight into the seller’s mindset. Are they just thinking about moving, or is there urgency to their plans? Is the seller the homeowner, or a third party like a relocation company? Individual homeowners, especially those with established equity, tend to be more flexible than third parties or investors. Price isn’t the only thing you can negotiate; you can ask the seller to pay part of your closing costs or to leave behind appliances or other fixtures. It doesn’t hurt to ask.
Is the home in a floodplain?
Your lender or real estate agent should be able to answer this question for you. If the home is in a floodplain, it could mean mandatory flood insurance, which can be expensive. Make sure you get a clear answer on this one.
What’s wrong with the house?
The seller probably won’t be in a hurry to answer this one, so you’ll get the best information from the home inspector. Tag along on the home inspection if you can, so you can examine every potential blemish the property might have. The period between the home inspection and closing is your last chance to get the seller to pay for repairs. The seller is required to disclose information about major concerns, such as flood damage.
Can paperwork be produced?
You can ask about paperwork regarding appliances and the inner workings of a home. Knowing the age of a furnace or whether your water softener is under warranty can influence costs down the road. Repair manuals can be very helpful if you need to troubleshoot older appliances. Don’t hesitate to ask.
Visit usbank.com for more information on buying a house and mortgage options.