Buying your first home is a major event in your life. You will be making a huge financial commitment and want to make sure you get the right place for the right price. Here are 6 tips for first time buyers to help you negotiate the deal.
1) Get an inspection of the property before buying it. Even if someone has already bought the house, you should still have one done. If there are problems with the roof or walls, you may need to think twice about buying. Many people find out after they have moved in that their new home isn’t as good as they thought it was.
2) Find a real estate agent who you trust. There are plenty around who will do everything in their power to sell your house quickly and at top dollar. This is fine but remember that they will also earn a commission on every sale so they will not always tell you all the details of each offer.
3) Do not pay more than 5% above the asking price. It is common for agents to ask for 3-5% over list price – this is called “flipping” the house. A realtor can then say that a buyer’s offer is too low and a seller’s offer is too high. The seller can then agree to the flippa price. However, the only thing you really know by going along with the agreement is that you have lost money.
4) Know what you want. Make a list of features you would like to see when viewing homes. Ask any questions you may have. For example, are you looking for a lot with trees or a view? Are you looking for a garage or basement apartment? Be specific about what you are looking for.
5) Don’t accept an offer without having all the paperwork done. Buyers often put down 10% deposit as a security deposit which is returned after closing. This means that if something goes wrong during the process and you don’t end up paying the full amount, the seller could keep the deposit. Be aware of this and make sure you get copies of all contracts, deeds etc.
6) Take advantage of government programs such as FHA loans, VA loans, USDA loan program and other state programs. These will allow you to buy a property that you couldn’t otherwise afford. They are available to most applicants depending on income level. They typically require 20% down payment and a credit check.
Some lenders even allow borrowers to use their own cash savings to purchase a property.
If you decide to go ahead with pre purchase building inspections, be sure to hire a licensed inspector. Most states require them and some cities require them as well. Inspectors are trained to look for defects in construction and materials that may affect the structural integrity of the building. In many cases, they will identify potential problems that you might not even recognize yourself.
A building inspection report (BIR) is required by law and should be provided to anyone considering purchasing a house. It gives information about the condition of the structure itself, including the foundation, exterior walls, plumbing, heating system, electrical system, roofing and insulation, windows, doors, floors, stairs, subfloors, fireplaces, chimneys, wiring, ductwork, plumbing fixtures, gas piping, appliances, elevators and stairways, appliances, landscaping, and all other components of the house.
The BIR identifies the presence of cracks, mold growth, water leaks, damaged drywall, missing or loose fascia boards, rotten wood, peeling paint, broken or cracked glass, missing or improperly installed flooring, missing door hardware, damaged windows, missing or improperly installed siding, damaged roofs, defective windows, faulty electrical outlets or switches, and other issues. It should be noted that these items are not necessarily unsafe or unhealthy for occupants to live in; however, it is prudent to address these concerns prior to accepting an offer.
To obtain a copy of the BIR, simply contact the local building department and request a copy. They will send a certified copy of the BIR directly to the buyer via U.S. mail.
Many states have laws requiring the local building department to provide the seller with a copy of the BIR upon signing a purchase contract. Some localities also require the seller to sign a document certifying that he/she received a copy of the BIR within 48 hours of receiving it from the buyer and returning it to the buyer. Failure to do so is unlawful.
It should be noted that the BIR does not cover the interior of the house and its contents. It also does not include the appliances, furniture, carpets, drapes, wall hangings, floor covering, or any other personal belongings contained inside the house. Therefore, the only way to ensure that you are getting exactly what you bargained for is to conduct an inspection yourself.
Even while buying a house is a significant choice, it doesn’t have to be a stressful one. You may enter the market with confidence and locate the ideal home for you and your family by using these suggestions and conducting your research. Happy home searching! And as always, seek the advice of a financial advisor to receive professional guidance catered to your particular circumstances.