Beauty is only skin deep. Looks can be deceiving. Don’t judge a book by its cover.
All the sayings that warn against making snap judgments apply at an open house. It’s easy to fall in love with manicured lawns, spotless interiors and stylish furnishings. But there’s much more to living in a home – and whether a home presents good value – than what you see on the surface.
So, if you’re shopping for a home, how can you separate the contenders from the pretenders? And how can you gain valuable intel to help you make the right offer?
Here are the five most important questions to ask when you visit your next open house.
1. Why Is The Homeowner Selling?
Everything might look perfect on the surface – well-kept yard, updated interior, quiet neighborhood.
If things seem too good to be true, it’s natural to wonder why the homeowner wants to leave. This is especially important to know if the price seems a bit low based on what you see.
There are many standard reasons to sell a home. Maybe the homeowner got a new job and needs to relocate. Maybe the home’s too small for a growing family. Sometimes, though, it’s because the neighborhood has grown less desirable, or because the home has some serious flaws.
Depending on how transparent the agent or seller is, you may discover a red flag or some useful details you wouldn’t have known about otherwise.
2. Is There A Time Frame To Sell?
The more urgency a seller has, the more leverage you have. Sellers with a hard deadline tend to be more flexible on price and willing to negotiate. Plus, you may discover that the home was priced below market value from the start. When sellers are determined to move on quickly, it’s common for them to list below the competition to generate offers fast.
Check out what similar homes in the neighborhood have been selling for. You might find you have a potential bargain on your hands.
What if you find out there isn’t any urgency, or that the seller needs to stay in the home for a while? This is also useful information.
A seller who isn’t in a hurry may be less likely to bargain or accept an offer below the asking price. However, you may be able to outdo other offers without adding dollars to the equation. You can let the seller choose the closing date and even offer occupancy, meaning the seller can stay in the home for a set time after closing. Granting the power to control the move-out date is a huge plus for many sellers.
3. Have There Been Any Offers On The Home?
After you learn the seller’s time frame, it helps to know what you’re up against.
If the deadline is fast approaching, and there are multiple offers on the table, you may need to lead with a strong offer to get in the running. If there’s no urgency, and no offers have been made, you can be more strategic about your initial bid.
Keep in mind, it’s advantageous to the seller to say that several buyers are interested. After all, bidding wars drive up sale prices. If you’re told there have been multiple offers, you’ll need to gauge your interest in the home to decide your next move.
Are you willing to go back and forth with the seller and potentially offer above the asking price? Can you afford to negotiate for several days and potentially miss out on another home? Finding out you have some competition doesn’t mean you need to offer the world or pass on a home, but it can give you some insight into how the negotiation process may play out.
4. Have There Been Any Changes In The Price?
You can find this information – and how long a home has been on the market – if you have a real estate agent or access to the Multiple Listing Service (MLS). But even if you know the price has changed, finding out why can inform your decision to make an offer.
Why’s that? Let’s look at the most common reasons for a price drop:
· The home was priced above market value. Many price drops occur after 90 days, which is often the amount of time before a listing expires. In many cases, fatigue sets in for the homeowner. There also might be more urgency to sell. This can work to your advantage with your initial offer and any counteroffers. To get an idea of whether a home is still overpriced, look for these three signs.
· An inspection revealed a major flaw. The seller or real estate agent should inform you of this. If you live in a state where disclosures are not legally required, be sure to include an inspection contingency in any offer to buy a home. Finding mold in the basement after you close on your new home means you’ll probably be on the hook to address it yourself.
· The home was cluttered, unclean or poorly staged. A home that drops in price because of grime or clutter can become a great value. It doesn’t cost much to do some landscaping, cleaning and interior designing. If you can get a discount on the home because it wasn’t pretty enough when it hit the market, you might want to take advantage.
· The seller needs to sell quickly. Urgency can drive homeowners to settle. If the sellers have a hard deadline, they may have priced their home below market value at the outset or be willing to accept an offer below asking price to get the deal done.
Learning that a home dropped in price (and why) can give you leverage during negotiations or a reason to walk away. Either way, you’ll gain useful information to guide your next move.
5. Can I See A Seller Disclosure?
In most areas, sellers are legally required to disclose renovations or potential issues related to their home. From making you aware of lead paint to showing you that the guest room above the garage was built with a permit, seller disclosures protect both home buyers and sellers. They give buyers full knowledge of what they’re getting into and prevent sellers from being held liable for future problems.
Disclosure laws vary by state and even by county. In most markets, disclosures are given once a seller has accepted an offer. Then – if a disclosure contingency is in the purchase agreement – the buyer will have an opportunity to back out of the deal after viewing the document.
Even though it may not be legally required to provide disclosures at an open house, many real estate agents advise their clients to provide disclosures upfront. Doing so avoids headaches down the road and gives buyers peace of mind that there are no secrets.
If you’re interested in a home, ask for any available disclosures or find out when you can view them. The more information you can get – and the earlier you can get it – the sooner you’ll know if a home could be right for you.
Ask The Right Questions To Make The Right Decisions
Knowledge is power in real estate. Learning about the condition of a home and the seller’s motivations can not only guide your decision to make an offer, but also what to include.
In most situations, it’s a good idea to consult with a real estate agent on how much to offer and which concessions you’re willing to provide for the best chance of success. More often than not, what you learn from the seller or listing agent by asking questions will help you make the right calls.
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