Before You Buy a Home

by Shaunna Privratsky
12 questions to ask before you make an offer

You've finally found your dream home and you're ready to sign the contract. Wait! Before you commit to thirty years of mortgage payments, ask some important questions. Finding out the answers now may save you years of aggravation.

1. Why are the owners selling? The answer will show how motivated they are. Someone who has to move quickly for a job is more likely to take a lower offer or to sweeten the deal by paying closing costs or adding in other extras.

2. How long has the house been on the market? The best deals usually sell quickly, but if a house has been for sale for more than a month, finding out the reason could save you a bundle down the road. Maybe there are some expensive "specials" that are going to be assessed, or there is a
problem with one of the systems of the house. If you discover a problem, and you are still interested, you are in a stronger position to negotiate a lower price.

3. What are comparable houses in the area selling for? Known as "comps," your realtor should be able to find out if your
dream home is priced right.

4. Break down the price per square foot to see if you are getting a good deal. You can get the square footage from the tax office, but most listings on the Internet routinely reveal this. This will also tell you if the house you want is priced fairly. A big discrepancy will show up if it is priced too high, and this is another bargaining chip when you get to the negotiations.

5. Notice the other homes on the block. Is your intended house the nicest or most upgraded? This might seem like a bonus, but
it can mean trouble down the road. If your dream home has been upgraded beyond the neighborhood, it will be assessed lower than its true worth, and you will lose equity. It is better to buy a low- or medium-range home and fix it up yourself, to
your liking, and cash in on the equity faster.

6. How desperate are the owners to sell? In this age of foreclosures and upside-down mortgages, the more you know, the better. Some owners cannot come down in price because they need at least the asking price to break even. Houses that have been foreclosed on, or are in danger of foreclosure, may be priced right, but you have to move in quickly. Banks are notoriously unwilling to negotiate, and you may be stuck paying extra fees because of short-sells, where the bank agrees to lose part of the profit in order to sell it.

7. What are your long-range plans? If you think you may need to move again in three to five years, you may not recoup the
equity you put into the home, and may lose money when you resell. In this case, buying a home that is in a lower price range may make more sense.

8. It is important to understand how houses are assessed. A home may be priced higher than the assessment, but if the property values lower, you may not get back your money when it is time to sell. Property values are based on many factors,
including the markets at the national and local levels. Find out beforehand what kind of market you are buying into, in order to safeguard your financial future.

9. If at all possible, take a good look around the neighborhood. Is there adequate parking at local stores, train stations, easy access to major roads and Interstates, post offices, banks, etc.? No one likes to find out after the fact
that it takes half an hour to find a parking space when you have an important meeting.

10. If you have children, or are thinking about starting a family, find out now about the local schools. An easy way to
tell is to check the average SAT scores. Most public schools routinely post these, so that you get a feel for the type and quality of education that they provide.

11. Ask about utility bills. Besides the mortgage payment, you will be responsible for water, heat or air conditioning,
electricity and all the other services it takes to keep a home running. A call to the utility company will give you an average payment for that particular house. This could save a nasty surprise when winter rolls around or you open the first
water bill.

12. Try to speak to the neighbors. They see a lot and can give you the inside scoop better than digging around in old records
or evasive answers from the seller's realtor. They usually know the owner's circumstances, and you can get an idea of how you'll fit into the neighborhood. Take a walk around the block, chat up someone out in the yard, or just knock on the
door for a friendly hello. You'll be surprised at how forthcoming most people are.

Buying a home is usually the biggest purchase a family undertakes. Protect yourself by finding out the answers to these twelve questions, and you will be living in your dream home before you know it.

Take the Next Step:
- Buying a home is usually the biggest purchase a family undertakes, so protect yourself by finding out the answers to these twelve questions.