Have You Decided to Buy a House
Buying a house means that you might be risking years and years of hard earned money and possibly putting yourself into debt that could take decades to pay off. There are lots of factors to take into consideration before you make your purchase in order to ensure you have a pleasant experience and come out financially healthy.
The rules are different if you are buying a house as an investment property than if you’re buying to live in it. In this article I will share some of the important things to consider about the property in question before you sign the contract and change your financial future.
1. How much was the home last sold for– Was it sold before the recession? I’ve noticed that nowadays, most houses at their 2001- 2002 price levels. If the house you are looking to purchase has not been reduced substantially (25 – 30%) from its 2005 – 2006 levels, you could be overpaying.
2. Identify the conservative estimates on the home value – Fortunately, you don’t have to hire an appraiser to do this. Zillow and eAppraisal are great websites which take into tons of factors to give you a price range. Don’t look at their estimate, but rather the lowest value possible in order to stay on the safe side.
3. How much are you paying for square foot of living space? The price per square foot is one of the most important factors you must consider when purchasing a house. You can easily find the average price per sq. foot in the same zip code or for similar houses in the area on Redfin and Trulia. Always aim to be on the lower end, especially if there is work to do on the house.
4. Are you buying a flipper? A “flipper” is a home purchased by an investment company or an individual with the sole purpose of making a profit on it. These houses are purchased as a foreclosure or a short sale, slightly renovated, and sold for a much higher price. Flippers are easy to identify – they almost always have fresh paint and new carpets, two of the cheapest ways to breath cosmetic life into a house. Also common in flippers are large mirrors, painted counter tops, painted doors. Remember,investment companies try to make the house look as new as possible while spending the least amount of money. Stay away from these because you don’t really know whats on the inside.
5. Leaky roof? Squeaky floors? Be sure to hire someone to check for mold. – You can always place an offer on a house without knowing the mold situation as almost all contracts allow you to rescind offers if it fails an inspection. Mold is a problem that can cause you to go under on your house and even presents itself as a health problem. Be sure to hire a sound environmental inspector to detect mold.
6. Sure, the house looked nice during the day – but have you checked the neighborhood at night? When buying a house, check the area during the day and during the night time. Sometimes, gangs and criminals tend to walk around at night. Also, do people walk around the house? Is it lit with street lights? Are their gang signs tagged on the walls of houses, markets, or street signs?
7. Is the plumbing in good shape? There are a few ways to run a quick check on the plumbing before submitting an offer. Go to one of the bathrooms and turn on the shower water, the faucet, and flush the toilet. See if the water drains properly. If not, you could have a problem at your hands.
8. Does the house have “curb appeal?” Although not a financial term, curb appeal describes the attractiveness of the house in terms of how people who might buy it from you later see it. Some houses are stunning on the inside, but look horrible from the outside – so much that they might be looked over for a less stellar house thats more attractive. If you’re buying real estate, its good to check how other people perceive it.
9. How much money do you have to spend out of pocket to bring your house to your standards? Besides the down payment, there are closing costs for a loan, furniture, renovation (paints, carpets, counters) and other small out of pocket expenses. Make sure you keep this in mind when putting down any sort of money.
10. Are you buying a corner house or a house in a busy street? Corner houses are priced much lower than houses in the middle of the street because they are often victims of car lights being shone into the house and more traffic. The same applies for houses in the middle of a busy street. Make sure when buying a house, you aim to be as far from the street traffic as possible.