Ten Questions to Ask a Seller When Buying a Home
1) Why is the homeowner selling his or her home?
A homeowner may decide to sell his or her property due to any reason, and chances are you might never get to know the real reason why. However, it's an important question to ask, and that too preferably directly to the homeowner. The answer may help you in finding out how anxious the homeowner is in selling the property. If the seller is in need of immediate cash, he or she might prefer a "cash out" sale to raise the liquidity, and might agree to a lesser price in return of hard cash. Perhaps the homeowner is unable to pay the monthly loan installments for the home, and prefer to sell out the assets rather than face financial litigations from the bank or credit lending company in the near future. The answer can provide some idea why the person wants to sell, and by knowing the precise reason, the buyer benefits by negotiating in the correct way and manner.
2) How much did the homeowner initially pay for owning the property?
The market value of a home can be easily found out from real estate personnel and realtors. However, it's important to know how much the previous owner has actually paid to own the house. If the homeowner has paid a high amount, he or she might not desire to negotiate for a lower price. However, if the person has bought the property many years ago, and the value of land has gone up over the years, the seller might be ready to negotiate for a lower price in comparison to the market rate, simply because he or she can afford to do so. It's important to know that the current value of the home has nothing to do with the amount for which the owner desires to sell the home. Getting an idea helps to decide what kinds of figures to put forward while negotiating.
3) Are any financial conditions, ongoing home loans, or mortgage related conditions imposed upon the home that you’re planning to buy?
Public records and shared common knowledge provides information about ongoing home or mortgage loans. Home loans tend to last for many years, and it is imperative to know about the current loan status and the fines or penalties, if any, are imposed upon the home you're planning to buy. If the seller is capable of raising enough equity, he or she might have room to negotiate, and offer a good price for the home. If, however, the seller is at a break-even point with the total loan outstanding amount, he or she might be unable to negotiate for any other price other than the outstanding loan amount. In such cases, the buyer might be required to undertake a “short sale” with the lender.
4) Has the home seller prepared an honest and valid "Transfer Disclosure Statement" mentioning the material facts and issues relating to the home you're planning to buy?
In most states, the sellers and real estate agents are required to prepare a disclosure explaining the material facts and buying or selling conditions associated with the home in question. When a particular home is offered for sale on a "as is" basis, it means that the seller is not liable to pay for any repairs or damages which have occurred, or are likely to occur in the house in the near future. Usually this disclosure is presented to the buyer at the time of signing the title deed or there after. It is worth availing this disclosure beforehand, or at least to get a draft of the same in advance, so the buyer can determine the liabilities linked with the purchase of the house. Sellers generally tend to avoid disclosing any maintenance related facts such as major structural problems, roof leakages, plumbing and electrical defects, fire damage, and drainage problems, or any financial liabilities linked with the home in advance because it can drastically cut down the selling price, at times. Get the disclosure and study it to avoid any unpleasant surprises after buying your home.
5) What is the homeowner's deadline for selling the property?
If the home seller is working as per a fixed timetable due to some reason, he or she might be ready to negotiate at a lower price to save time, and this could prove to be advantageous to you. So find out how urgently the owner really wants to sell house for, and how long he or she is prepared to wait. This could help you, the buyer, in “building” the required pressure at the time of negotiating the home's purchase value.
6) What is the condition of the roof, and when was the last time the heating system was cleaned and serviced?
The question needs to be asked to gather an insight regarding the condition of the home you're planning to buy. Very few homeowners honestly declare the condition of property they're planning to sell, and a straightforward question pertaining to the condition of the house is likely to fetch in an erroneous or a manipulative answer. If the current homeowner has not changed the roof or repaired it over a duration of 15 years or so, you're soon likely to face a large bill of roof repairs after you buy the house. In addition electrical, heating, or drainage system repairs cost money. Find out how much you're required to spend over the home after you buy it.
7) What is the neighborhood like?
This is a question generally always asked by the buyer, and the answer, if truthfully given, may help you in deciding if you really want to reside in the particular community or area. A noisy or problematic neighbor, dogs barking at night time, nearby airport or railroad noise disturbances, etc. may induce to rethink your decision of a permanent stay in the neighborhood. Any road or commercial development planned in or near the residing area can also affect the value of the property.
8) What kind of reputation do public schools in the area have?
Public school ratings often reflect the worthiness of adjoining areas. Good and decent neighborhoods have fine public schools which sync with the area, while areas with higher crime rate reflect a typical atmosphere akin to the locality. Checking out the local public school rating is a good way to start your inquiry because your kids are likely to get educated in the same public school over the years.
9) Are nearby home areas safe for commutation and residing purposes?
More than often, it's the safety aspect which will decide whether you're going to buy a home in a particular neighborhood. One can find the crime statistics in the vicinity from the police department. The house could be in excellent condition, and you might chance to benefit from a good purchase deal, however a high crime rate and frequent visits from the law enforcement personnel is very likely to put any buyer off. The safety aspect can be effectively used to lower down the home price during negotiations.
10) What will you agree upon if I give you hard cash?
Very few individuals have surplus funds to make total cash payment and go in for an outright buy. Doing so would certainly invite a scrutiny into the transaction from the IRS. However, the offer of an outright buy is always tempting to the seller, and is also one of the most effective ploys in finding out the rock bottom selling price in a real estate negotiation.