Five Tips for Home Buyers when Purchasing the Biggest Investment of their Life
Buying a home, Denver Real Estate, value Add commentsIn case you didn’t catch the Today Show this morning. A home buyer in San Diego is suing her Realtor since she discovered she paid $175k more than her neighbor did for their house. She blames her Realtor for allowing her to ‘overpay’ for her home. I’ll go out on a limb and say she doesn’t have a chance at proving the malicious intent that is required by law to prove this unless her agent really screwed it up by selling her his own house without disclosing it. That being said, here’s a few things to remember when buying a house.
1. Buying a house? Do your own homework. Validate the comps the agent supplies to you with at least a drive-by. Develop your comfort level with the price and learn to ask the right questions. Your Realtor isn’t there to try to second guess your decision to purchase the home. He’s going to provide you with information about whether the price can be supported or not. Most of the time they may try to show you what else is available even though many buyers just get sick of looking and want to buy the house they think they fell in love with. The more experienced agents aren’t going to talk you out of buying a home. They are there to sell you one, remember?
2. The appraisal isn’t really what the home is worth. There’s no absolute value for a home. It’s simply an estimate of what the home could be worth on the open market at a particular moment in time when compared to other homes that have sold. It just means that the price can be supported, at least theoretically….that’s it. The only time there is an absolute value for a home is the moment it is sold. At that very instance it has a value. Ten minutes after you walk out of closing…things might have changed.
3. Trying to compare your home to another persons home just isn’t that easy. It would be like trying to compare two similar women that were 5′6″, 115lbs with blond hair and saying they can both do the same job. Upon further examination you discover that one is a the female executive of a Fortune 500 company and the other is the meth-head that lives in her alley. Every home has unquantifiable characteristics that will make the home different from the neighbors house. The wear of the carpet, the view from the yard, the smell as you enter. Not to mention the motivations of the seller that may have influenced the final ‘value’. All of this could easily turn into 100k or more on a million dollar home.
4. A home is worth what you pay for it assuming of course that you know what you’re paying for it, how much that works out to a month, what similar homes have sold for in the past, and most importantly what other homes were available when you were shopping for a home.
5. Start asking questions when you don’t understand. If you don’t trust the answers you get or don’t understand the answers you get, ask again. Ask other people. And most of all, ask yourself. If you don’t know the answer, look it up.
I don’t mean to be condescending to homebuyers. On the contrary. I simply want them to make sure they are awake to the truth that they are the ones that will be paying for the home. So instead of just saying it’s the biggest investment of your life, act like it really is. Otherwise, Caveat Emptor. Finding the right Realtor for you and educating yourself as to the process (or even allowing yourself to be educated) are very important parts of the home buying process. If you’re not ready to do the work, you probably aren’t quite ready for home ownership.
August 22nd, 2008 at 2:48 pm
Is there such thing as malicious intent on the part of the homebuyer? Such as 3 inspections reports, 2 appraisals, initimidation, and then opts out after 14 days. All of this on a 3 yr old home (built in July 2005 and took 8 mos to build) that was built by a well known custom builder
September 6th, 2008 at 12:46 pm
Barbara, sorry for the slow response.
The buyer is usually within there rights to inspect the property to their hearts content (within the limits of the contract) even if they have some malicious intent. As a seller, it’s important to make sure the contract you negotiated is as ‘tight’ as possible with the dates to make sure your not losing a bunch of your time just to have the buyer walk away. 14 days would be considered tight in my market. You might want to count yourself lucky on that. Most of the time when I’m working with buyers, I try to push at least one of the contingency clauses out to within a week of closing, just in case something goes wrong.
I have heard of buyers getting a contract accepted then trying to beat down the price with the inspections and the appraisals. Since the buyers is usually paying for all those extra reports, the buyer usually becomes ‘cash committed’ at some point and will follow through. In this case, it sounds like the buyer is just trying to get a deal. I’d just move on. Win some, lose some.
This often happens with fixer properties. I could see how somebody might also try that on a new home as well. These days, buyers just assume that your home is worth much less than your list price even though they looked at the competition and felt your home was worth writing on.
Thanks for stopping by.