Real Estate 101: Be a Better Buyer. How to Buy a Property the Smart, and Profitable Way

Before ever officially purchasing a house, you must talk to the seller and ask some questions. You should find out how much the seller paid for the house. This is crucial, because you never want to overpay for a house if you don’t have to. Knowing how much the seller originally paid for the home will let you know if you can  negotiate, and how much. Wouldn’t it be upsetting to find out that the homeowners have had the house listed on the market for months and weren’t able to sell it, and you offered full asking price? Surely, they would have taken  lower. Don’t make that mistake. Also, if a home is in foreclosure, you’ll definitely have a leg up, as they’ll be wanting to sell right away.

Another important thing to find out is how much the seller still owes on the house. If they still owe more than the asking price, the house is probably a short sale. How much does the seller still owe on the home for sale? If this amount is higher than the asking price, it is likely you are facing a short sale. If it is not a short sale, then the seller will need to bring cash to the closing. 

How long has the home for sale been on the market? Knowing that a property has been on the market for more than 60 days will give you more room for negotiation on the price. Whatever offer you come up will be very personal to you and your individual needs. Knowing the right questions to ask when buying a home can really help you find the best offer price that matches your needs with the real estate climate. Ask yourself the following questions when figuring an offer amount:

What is the home listed for?
How much can you actually afford?
Is this listing priced the same as similar homes?
Is it a hot climate in the market currently, or cold?
Is this really the house that you want?

What amount do I feel comfortable paying for a house?

Knowing the condition of the home will not only help you determine whether or not to buy it, but it will also help you to come to a realistic offer. For example, if you find that the house has structural issues or poor upkeep, you should consider these issues when calculating an offer price. Some of the more common questions to ask are:

What type of foundation does the house have? Is it raised or slab? Newer homes usually have slab foundations, but raised foundations allow access underneath the house. This can make electrical and plumbing repairs more accessible and less expensive. Does the house have insulation? Insulated walls and attics increase the value of the property, especially in colder climates.

When were the appliances and systems last replaced or updated? Also consider how old the appliances are, as some cannot be repa
ired due to the fact that parts are no longer available. Many jurisdictions do require of sellers a standard of quality, but this can be very hard to enforce.

The house closing is the final transfer of the ownership of a house from the seller to the buyer, which occurs after both have met all the terms of their contract and the deed has been recorded. This term can also be used to explain the timing of when the deed/ownership of the house will be transferred to the new owners. The closing usually takes place at the office of someone like a title officer, escrow officer, or real estate lawyer–someone who is licensed in initiating the transaction and purchase agreement.

Sometimes, if you are unable to get a loan from a commercial lender or bank, the seller will loan you money to buy the home. A seller who wants to spread the income from the home over a long period of time may be more willing to do this.

Seller financing occurs when the seller takes back a mortgage on the home. The buyer signs a promise to repay the loan and either a mortgage or deed of trust. Both of these would allow the seller to foreclose on the buyer should the buyer default on the payments of the purchase agreement. The seller then transfers the deed to the buyer. Therefore, the buyer has title and can sell the house or refinance it, just like if he or she had obtained a mortgage from a bank or commercial lender (as long as the buyer keeps current on the payments described in the purchase agreement).

3 Comments on "Real Estate 101: Be a Better Buyer. How to Buy a Property the Smart, and Profitable Way"

  1. If you get a loan from the bank for real estate, please make sure you down spend the entire loan amount. Just because they approve you for a certain amount doesn’t mean you should use all of it. We did, and ended up house poor. We had to decorate our house with sub-par furniture, which we are not used to. My wife and I had regret for a long time, until I got a promotion and then we were able to actually have a life outside of the beautiful home we bought. It felt like a prison for a little while (though, a very nice prison at least).

  2. That sounds awful.

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