Housing | Real Estate

Every house has something wrong with it. Even brand new homes. Homes are made by people out of wood and stone. Neither the people making the house, nor the wood and stone it is made out of it are perfect. Mistakes happen and less than perfect materials are used.

Sometimes this results in a problem. That is why you need to get a home inspection done before you buy any house. In fact, you should have it in your contract as a contingency that you will only buy the hose if you approve of the findings of the home inspection.

Notice the wording of the previous paragraph. It says that you will buy the house only if you approve of the findings. It does not say you will buy the house if there are no termites. This is what we in the business call a weasel clause. It lets you get out of the contract for a stupid reason.

If the home inspector has several items of concern for you on his report, you have a big decision to make. Will you be able to live with the house if the problems are repaired? Will these problems cause you a problem when it is time for you to sell the house? Can the problems be cheaply repaired or will the problem keep occurring?

If the problems can be fixed, you can ask the sellers to have the items fixed, or to reduce the price of the house the same amount as it would take to pay to fix those items. If the items are too large, you should be able to back out of the contract.

Any time you have a foundation problem, or anything similar you have to be very careful in proceeding. Foundation problems are very expensive to fix and unless the problem is fixed and the repair company will keep the warranty in place for you as the new owner you might want to look for another house.

If the problems are not major, you can ask the sellers to simply reduce the price of the house by the amount it would take them to have the items repaired. This works great if you are handy with your hands or know a carpenter or someone who can do the work for you cheaply. Normally, sellers overestimate the amount these repairs would cost.

For example, if there was a leak upstairs and the downstairs ceiling is stained, this looks like a serious problem. But if the leak is fixed and the ceiling is replastered and painted, the problem is solved. To a contractor this is a 2 hour job and cheap to fix. But for a seller to call a contractor and get it fixed it is a major hassle and will cost a few hundred dollars. Money that any seller with common sense will quickly deduct from the sales price of the home if you will let this problem go.

The home inspection and the home inspector are two of the best friends a home buyer has. Make sure you use them to your utmost advantage. They can save you a lot of money when buying a house.

Tip #17 in our series of 70 ways to save money when buying a house is to never tell your agent the top price you will pay for a house.

In our last tip, I explained to you the importance of having your own real estate agent on your side. And if you are going to but property you should have an agent on your side, especially if it does not cost you anything.

But, your agent is human, and there is no way to tell if he/she has your best interest in mind. The higher the price of the house you buy, and the more you pay, the larger the commission for your agent. So if the agent was selfish, she would try to get you to pay as much as possible. She wants you to buy the most expensive house you looked at because if you buy it, it will be the largest commission for her.

By pushing you just a little bit towards the more expensive house, she will make a few hundred dollars more. Not bad for a few seconds of work.

Or say you are negotiating with the sellers, and your agent knows you can pay more than you are offering. Will she be able to go in to the sellers and really sell them on the offer? Probably not.

That is why I suggest you never tell your agent or any real estate agent how much you can pay for a property.

Your agent will ask you how much you can afford, but do not tell. Give a range. Tell him,

We would be comfortable paying between 225- 250 thousand for a house.

There is no telling if your agent will keep your information confidential. By law, they are supposed to, but it is very hard to prove, and you do not want to take that chance. By giving them a range they have all the information they need to do their job well. They can show you all the houses that meet your needs in the price range you gave him. Then, if the agent shows you a house that is above your price range, you might want to think about getting another agent.

After giving a solid range, there is no reason an agent should show you a house that is above your range, unless there were not enough homes in your range. But if you do some homework, you should easily be able to choose a range that you will be comfortable with and that has plenty of homes to choose from.

By keeping this information to your self you protect yourself from the human tendencies that get us all in trouble. Realtors are human, and you should remember this.

By giving your agent a range of prices of homes you want to see, you are making it easier on the realtor to narrow down homes to show you and you can save yourself a boatload of money at the same time. The best thing is, that you would never know if your realtor did something that made you pay more. Do not let the realtor screw it up for you. Keep this information to yourself.

Tip #20 in our series of 70 ways to save money when buying a house is to buy a new home from a builders inventory.

An inventory home is a brand new home built by the builder but without an owner. Either the person who wanted the house built backed out of the contract or the builder built it as a way to keep his staff working, or a model, or a way to add built homes to the neighborhood.

Whatever the reason of the inventory home, it can be a bargain for you. Builders hate having empty houses sitting around. They try to build as fast as possible and move to the next area. If a home is already built and sitting empty it is called an inventory home.

Builders often have specials on these homes. They offer great deals to get the home sold. But most do not offer the deals to people without Realtors representing them. So check to see if a Builder you like has any inventory homes and get your realtor to negotiate for you.

Builders get loans to build houses. The longer a home is sitting there empty, the more payments and interest the builder has to pay on that house. So the builder wants to unload it, quickly. And to do this, the builder will reduce it several thousand dollars. It will cost much less than having the builder build you the same model from scratch.

The only drawback is that the appliances will already be installed and you will not get to pick the model or lot. But if you happen to like an inventory home, there is no difference between it and any other home the builder builds. In fact, if it was an inventory home, you know that everything in the house works, and it will have the best of the best upgrades.

If there is anything you do not like about the home, you can ask the builder to replace it or change it at no cost. For example, my wife and I went to look at a condo complex recently. They only had one left. And it had wood floors. I prefer carpet, so the builder was more than willing to take out the wood and put in top of the line carpet, at not cost. The condo also had the best appliances as well. If we had bought this same condo earlier and chosen the top of the line carpet and the same appliances we would have paid thousands in upgrade charges.

Buying an inventory home or condo is a great deal. You get to see what the house will look like when you move in, the builder is desperate to sell it, and you get a brand new house or condo for less than what your neighbors paid. That is instant equity!

If you are looking to buy a new house or condo from a builder, an inventory home is a great way to save you several thousand dollars. And you can have an agent represent you and save thousands on the commission like I discussed in Tip #1. You get the best of both worlds: you save several thousands of dollars and get a brand new house.

Tip #23 in our series of 70 ways to save money when buying a house is to buy a home warranty.

Despite the love buyers show for their newfound properties, there could be things beneath the surface not foreseen or witnessed. From a cursory glance, homes may appear spotless with no maintenance required whatsoever, even on resale homes. The word of the seller may cloud enough judgment to avoid covering insurance costs on the home. There have been countless cases where a buyer moved into a home only to find pre-existing wear and tear on the home and leaks a couple of months later. For this reason, a home warranty should be considered.

In essence, a home warranty is a service agreement that protects your home’s major operations including its roof, water systems, structure, and appliances. They serve a dual purpose in the real estate game: for sellers to use them as a valuable marketing tool during their selling period and for buyers to rest easy knowing their potential home is secure. These plans can be geared towards any home from the spanking new to the 50 year old duplex. As long as your items are in decent working order and conditions arise after the issuance of the home warranty, you should be covered.

Many buyers make the mistake of interpreting home warranty plans as home insurance policies. They are both totally different things. Home insurance policies are plans providing coverage for burglary, theft, and natural disasters while home warranties cover breakdowns caused by wear and tear in addition to failed circuits, plumbing, or any other home malady. A home warranty is excellent for anyone that wants to gain a higher level of confidence when moving into a resold home. In addition, home warranties are touted by real estate experts as critical to after-sale problem prevention. Although buyers still have the right to file suit on sellers who fail to disclose construction and appliance problems, home warranties can lessen the blow.

Today’s home warranty policies usually have a standard 12 month term with the option for more. 6 months or more can be provided in seller coverage as well. In addition, many home warranty companies also offer complimentary inspections to ease the transition into the plan. When it comes to selecting a home warranty, make sure you compare multiple providers. Comparing means finding how which items are included in standard coverage, what items are parts of separate policies, the co-payment, and finding out the reputation/track record of each company. By shopping around, you are virtually ensured that you are getting the best coverage for a fair price.

As buyers, you can have the seller pay for your home warranty along with other concessions. This usually occurs when there has been concessions made by the buyer, such as paying for the house at slightly over market value or surrendering to owner financing. Check to see if you are eligible for a home warranty plan paid for by your seller today for better real estate terms.