Every home buyer needs to make sure they are making a good investment. Buying a new home is one of the most significant financial decisions one can make in his/her lifetime. It is very easy to superficially fall in love with a beautiful house; but an individual need to understand some of the key issues surrounding the home buying process, due diligence. Here are 4 most important things every home buyer should know to protect their big purchase.
Pre-approval gives home buyers advantage of bidding for a house: the solid understanding of whether a buyer can afford the home and the price guideline when it comes to home shopping. Buyers should not waste a lot of time and energy looking for houses that are above their budget. Pre-approval help the buyer to know their actual budget, and save them from the looking for houses that they cannot get approved for. In essence, pre-approval is to:
- Shows that a buyer is capable of purchasing a house
- Help define the buyer’s search
- Improve the leverage in negotiation with the seller
- Enhances the bid acceptance rate
- Home inspections
Every home buyer needs to get a general home inspection. The general home inspection provides a buyer the chance to discover defects in the home. This allows the buyer to make decisions on if they wish to proceed and if so, what if any, repairs they wish to request from the seller. A home inspection is a thorough examination of the condition of a home, and normally performed at the time of sale. Whether one is purchasing his/her tenth home, or going for the first one, a home inspection is highly recommended.
More specific inspections may also be required. For example, I always recommend that my buyer clients get a termite inspection. Nobody wants to buy a house with termites! If your potential new home has a pool, a dock or other special structure, you may want a specific inspection for that item as well.
What a general home inspector examines
A good inspector should examine all the interior and exterior conditions of the home and write a report of the findings. Most good inspectors will determine:
- Whether each problem is minor defect, major defect or safety issue
- Items that are suitable at the time of purchase, but have to be monitored closely
- The items that need serious repair or replacement
- The problems that might cost a buyer a significant amount of money to fix.
Advantages of home inspection to a buyer
- It provides the warning signs of problems
- It saves money on wrong investment
- It improves negotiation
- It gives the buyers more information about what they are about to purchase
- It helps buyers to think long-term confidently.
An appraisal is a professional opinion of what a property is worth on the day of assessment by a licensed Real Estate Appraiser. Only a licensed Real Estate Appraiser may issue a formal appraisal. This is not to be confused with a Broker’s Price Opinion or a Real Estate Agent’s opinion on the price.
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A land survey is a legal graphical depiction of a property by a licensed Land Surveyor. It allows buyers to see all the features of the property from an overhead perspective. In these trying times, combined with the red tapes involved in buying a home, it is almost impossible for buyers to know if they are truly getting what they want.
The benefits of conducting a survey before you buy a home
A survey shows the size of the land, boundaries (by metes and bounds) and the different improvements on the land like a house, garage and fence. It is very important that a buyer get a survey for 2 main reasons (and then some) (1) to make sure that there a no property boundary encroachments prior to purchasing the property and (2) so that title insurance will not exclude “any issues that would be shown on a current survey”. You do not want to buy a house and then find out it was built 20 feet inside someone else’s property line or vice versa. Yes, that DOES happen.
Buyers can use the survey to show the official boundaries of a property and this can be helpful if for any reason a court action takes place involving the boundary lines.
Survey help buyers to know the zoning restriction relating to the property features and use. Some regions have defined restrictions that affect the property. Violating the zoning restrictions might lead to legal action and penalties.
The Survey shows any easements running through the property. This can be one of several types of easements like a driveway easement or public utility easements. It is important for the home buyer know where the easements are located so an owner doesn’t build a fence through it and inhibit utility companies from accessing the property within the easement. It is also important to know because if there is a shared driveway or a neighbor has an easement across the land a buyer is considering purchasing, the buyer would need to know these things prior to purchasing.
- Owner’s title insurance
Owner’s title insurance is an insurance that protects the home buyer from any problem with regards to the title of a piece of real estate. This policy guarantees that the property being purchased is free from undisclosed rights, and any confusion over the right of ownership. If a claim is made the title insurance company will meet the cost of the policyholder up to the benefit limit to protect the policyholder’s investment in the property.
Owner’s title insurance protect buyers from things like:
- Liens for unpaid property taxes
- Disputes between prior owners over wills, property lines, etc.
- Liens for contractors who worked on the property and were never paid
- Forged signatures or fraudulent claims against the property
- Clerical problems in legal documents that caused an issue with the title
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