Over half of homeowners experience buyer's remorse, according to a Trulia survey. And no wonder: the home-buying process can be overwhelming, especially for first-time home buyers who may not know much about real estate or the local market.
The challenge is that that home buying is both a business transaction and an emotional commitment. While you want to love the home you choose, you don't want to choose the home simply because you've fallen head over heels for it. Knowing which questions to ask when buying a house can help you get the information you need to make the right purchase.
Before making an offer, there are three things that buyers should ask about: price, home condition, and location.
- Buyers should compare the home price to similar homes in the area, ask whether the home is in foreclosure, and figure out how many offers have been made on the home.
- Key aspects of home condition to examine include the roof, foundation, insulation, and any appliances included in the sale of the home.
- Questions about the location should touch on topics such as flood risk and schools.
Questions to Ask About Price
How much is a home worth? If you answered, "What buyers are willing to pay," you're only looking at part of the equation.
What Is the Value of Similar Homes in the Neighborhood?
Obviously, buyers have different priorities. One buyer may be willing to pay more for a turnkey house that needs no repairs, while another will place a premium on historic charm and good bones. But when determining the fair market value of a house, it all comes down to comparative market analysis (CMA).
The price of similar homes sold in the neighborhood is your best indicator of value, because your bank's appraiser will rely on those comparable sales to compute the value. Your agent can obtain a list of recently sold properties for you.
Don't assume that the seller will have used comparable home sales to set their price. Do your research before accepting their valuation of their home.
Is This a Short Sale or Foreclosure?
If it's a foreclosure, you might not be able to secure financing for 90 days. If the seller owes more than the asking price, then you are looking at buying a short sale, or the seller will need to bring cash to closing. If a seller needs to write a check to close escrow, you will be very unlikely to get the seller to pay your closing costs or offer to pay for any repairs. It's better for you if the seller has a lot of equity.
Are There Multiple Offers on the Table?
Some homes generate multiple offers, and in that event, your offer will need to be very strong to survive the competition. Don't back away from a multiple-offer, situation because the last offer submitted is often the winning offer.
You might be able to negotiate a discount on the price if the home has been on the market for 90 days or longer. All of this depends on the local real estate market; in a rural area, houses may stay on the market for 360 days or more.
Questions to Ask About Home Condition
The condition of the home includes everything from the roof to the foundation, as well as all major appliances and systems. Ask about estimates for repairs, and don't make assumptions about the potential costs.
If you know in advance that the home has structural issues or deferred maintenance, you might want to consider those problems before choosing an offering price.
Don't assume that you can deduct the cost of anticipated repairs from the sales price. The price might already be adjusted for that factor.
How Old Is the Roof?
Newer roofs have a life expectancy of anywhere from 15–50 years or more, depending on materials. Your lender might also require repairs before closing, and you should determine who pays for that.
What Type of Foundation Does the House Have?
Raised foundations allow access under the home to reach plumbing and electrical, as do homes with basements. Slab foundations are more common in newer construction. You should ask what had existed in that area before the new homes were built, to see whether the builders put up a new subdivision over a wetland area that is now likely to have issues with drainage or dampness.
How Is the Insulation in the Walls and Attic?
In colder climates, insulation is more important, and each locale sets standards. Insulating a home after you buy it will cut down on your utility bills, but it doesn't increase your market value much.
When Were the Appliances and Systems Updated?
You should ask whether any appliances or systems have been replaced, and if so, why. It's a plus factor if older plumbing and electrical details have been updated, but some older appliances can't be repaired because parts are no longer available. Look beyond whether the appliances are the newest trendy color, and make sure they work as intended.
Questions to Ask About Location
In real estate, you often hear that it's all about "location, location, location." Homes in desirable areas are worth more than similar homes in locations that are not so desirable. You don't want to buy a home in a bad location, because reselling it will be difficult.
You can find a lot of housing value data on the web, but some of that information is incorrect. For example, a Zillow estimate can't accurately compute value on homes in neighborhoods where the size and configuration are nonconforming, but it can give you a general idea of value in the area. It's not a substitute for an agent CMA or an appraisal.
How Much Are Nearby Properties Worth?
Surrounding areas influence property prices. For example, apartment buildings and commercial and industrial developments tend to lower the value of residential houses around them. Remember, if the home is cheap now, it will probably be the cheapest home when it comes time to resell. Ask about all neighboring developments.
What Are the Neighborhood Demographics?
Where Are the Schools Located?
Schools are a huge concern for parents with small children. In California, even if you buy a home within the boundaries of certain school districts, there is no guarantee that your children will get into those schools. You should ask about nearby schools and know your options.
Is the Home in a Flood or Earthquake Zone?
Standard homeowners insurance does not cover floods or earthquakes, so you may need separate coverage if these are likely hazards in your location. Flood insurance is available through the National Flood Insurance Program (NFIP). Typically, earthquake insurance can be purchased as a separate policy or added as an endorsement to your homeowners insurance.
What Are the Other Nuisance Factors?
Traffic from nearby restaurants or stores may be an irritant. With freeways in the distance, you might not hear the noise during the day, but as night falls, the clatter and constant hum may get louder. Even barking dogs can drive a person nuts. Ask about these often-forgotten factors to make sure you won't be surprised later.
The Bottom Line
When you're buying a home, the most important questions to ask are about price, condition, and location.
Remember, real estate markets are subject to swings; it can be a seller's market, buyer's market, or neutral market. But regardless of when you're buying, don't be rushed by external conditions. Talk to your agent, and get the information you need. It's the best way to prevent buyer's remorse.