Buying a new home is exciting and perhaps a bit stressful. After looking at too many homes to count, you've found a great house at an acceptable price. But before you make an offer to the seller, take a deep breath and ask your Realtor® the following questions. Asking a few thoughtful questions upfront could save you a lot of stress in the long run.
Why is the homeowner selling?
Is it because they're relocating? Are there loud neighbors next door? Maybe there's a huge new shopping center planned for development across the street? Chances are, the homeowner is moving up to a larger house or moving down to a smaller house.
However, sometimes sellers are motivated to move by external factors that could affect future resale value or livability. If you ask only one question of your agent before submitting an offer, ask this one.
» Quick Tip: Sometimes the seller's realtor will ask for proof of funds in addition to your mortgage pre-approval to make sure you're actually qualified to buy the house.
What is the home's condition?
How old is the roof, furnace, air conditioner, plumbing and electrical units? What improvements, if any, have been made to the house since the seller bought it? If the house has a basement, was it freshly painted or remodeled?
You have to consider the possibility that the seller is covering up a problem, like water seeping through the walls or foundation issues.
Make sure you order a home inspection from an experienced home inspector to identify any potential issues.
Most states require the seller to provide the prospective home buyer with a disclosure form stating any known defects in the home or previous problems that have been corrected or not. Read the seller disclosure carefully. Does it look like an honest representation of the house, or does it appear deceptive?
How long has the home been on the market?
If the house has been on the market for a long time, you'll want to ask your real estate agent why. It may be that the home is overpriced or that a previous deal has fallen through. Regardless, you'll want to know the reason.
Comparative market analysis (CMA)
Ask the Realtor® to prepare a comparative market analysis. The CMA is a detailed report of similar homes offered for sale, homes under contract, recently sold and listings recently expired, canceled or withdrawn. The CMA will give you a good starting point for your offer.
How much is the seller paying for homeowner's insurance?
A simple but significant issue, because the insurance premium is included in your monthly mortgage payment. If the homeowner's insurance premium is exorbitant, the lender may refuse to extend a mortgage on the property because the debt-to-income ratio is out of whack.
Does the seller have a Comprehensive Loss Underwriting Exchange (CLUE) report?
A CLUE report contains information about any insurance claims made on a home within the last seven years. Why is a CLUE report important? A CLUE report will disclose any damage to the home, including flood damage after a storm.
Only the homeowner can request a CLUE report. The seller can obtain a free CLUE report for the home once a year from LexisNexis. The request for the CLUE report can be made online or by calling (866) 312-8076. If a CLUE report cannot be obtained before making an offer, home buyers may want to make their offer contingent upon a clean CLUE report. You might be surprised to know that claims made by the home seller can increase your future insurance rates!