Education and news for smart DIY landlords!
So you’ve found your dream home or the perfect property for investment and want to make an offer before somebody else takes it. Not so fast. The most common mistake home buyers make is that they focus on how it would feel to own the property today and not in the future.
This mistake can often end up in a lot of regrets. It may be due to some uncovered problems or realizing that they’ve paid a lot for a property with a lesser value. To avoid feeling regret in the future, here are a few things you must do before showing your cards at the negotiation table.
How long has the property been listed on the market? How many times has it been listed on the market? Is it a new listing? What could be the seller’s reason for selling? These are questions that will help you uncover information that most buyers won’t be able to find out.
Access the building department data. See if there were any additions to the property that has a permit or not. This is a strategy you should employ because some sellers might be basing their asking price on other factors not counted by appraisers such as square footage. And you don’t want to pay top dollar for things that are illegally added.
The house is great for sure. But is the surrounding area great to live in? Are there schools, groceries, amenities, and protective government agencies present nearby? You also should drive around at any time of the day to see what kind of people you’re going to share a street with. You can even stop by and ask questions if you want.
One walkthrough will not be enough if you want to make your money worth it. Don’t be that type of buyer who falls in love at first sight of a home. Check behind and under furniture for any flaws. Check everything to be sure. You don’t want to own a home that would have sudden problems once you’ll live in it. Because most of these problems are expensive to fix.
Knowing what kind of housing inventory the current area is in will help you decide what type of offer you should make. If it’s in a buyer’s market, it would likely tell you not to overpay with your offer because it shows that people are leaving for some reason. If it’s a sellers market, you can create a good offer that would put you in the negotiation table or shut out other competitors.
Property taxes vary from one area to another. Sure, the property might have a lower price than its comparables and getting a mortgage for it is fairly easy. But can you afford to regularly pay for its taxes in the long term? If not, then you should consider looking for another house in an area where taxes aren’t that expensive.
You would want to receive something to start anew after an event of a disaster. You also want something to cover the costs of repairs, maintenance, or replacements in case something about the home breaks down unexpectedly.
Ask the seller if they’re paying for any insurance, how much they’re paying, what the insurance covers, and factors that affect the home’s insurability.
As mentioned, you can afford the home. That’s why you’re making an offer. But the real challenge comes after closing. Some homes consume too much electricity and water. They also have a lot of amenities that you can’t handle their maintenance yourself.
It all boils down to the question, “Are you willing to make an offer of a home that you can easily buy but struggle to maintain later on?”
A smart buyer is one who never makes decisions based on emotion. Sure, your emotions can help you find the right home for your taste, needs, and investment strategy. But it’s your ability to think rationally is what ensures that what you’re spending on is worth it.
Get more home buying insights from these articles!