Buying your next home is one of life’s most exciting highlights. It could also be the biggest financial decision you can make. Because of better engineering and improvements in building technology, you would most likely want to live in a new home than an older one. You may go in thinking you will be free from the hassles of buying an old home. This is not exactly the case. Actually, you will need to put a lot of things into consideration, especially when some problems are uniquely tied to newly-built homes.
On the other hand, many buyers prefer an older house even if it needs some amount of work. If you are a DIY aficionado, you would love to purchase an older home and transform it to your liking, unmindful of the time and money you will need to spend on the project. To be able to customize it to suit your taste is an appealing option to make your house a more attractive place to live in.
Whether you prefer a newly-built house or an older one, buying a house is not like shopping for a garden setting, however. Because you’ll be laying out a lot of your hard-earned cash, you will need to take this big step armed with a smart plan. You will need to have the right questions to ask when buying a house in order to get the most savings and snag the best deals.
Your initial communication with the seller will offer you the opportunity to ask all of your questions about pricing, labour, customization costs, and other important matters you’ll need to make an educated decision. In order to be sure you’ve got everything covered, write down the questions that you need to be answered beforehand.
Not too sure of the questions to ask? To help get you on the right path, here are questions you need to ask, so there won’t be any unpleasant surprises later on. Don’t forget that this is a big leap involving a large amount of your money.
#1 Can your budget meet additional house costs?
Are you financially prepared to take on added house expenses outside its sale price? This should be on top of the list of questions to ask when buying a house. You’ll just be wasting a lot of your time and effort when you begin house hunting without realizing what you are up against budget-wise. Besides the sale price, there are other costs that you should be aware of. These include:
- Homeowners Insurance
- Current house upkeep and/or repairs
- Property taxes
- Homeowners association fees
- Future home improvements you may plan to have
Make sure you have money allocated for these extra expenses. While these additional costs will surely jack up your budget, you should be seeing their financial benefits in a few years.
In order to get your offer accepted, you need to convince the seller that you have the financial capability to buy their house. By doing this, you assure the seller that you are not wasting their time. Letting them know that you are a qualified buyer is like getting your mortgage preapproved.
The recession caused many mortgage companies to raise the bar on their lending standards. Nowadays, you will be required to pay some sort of down payment to be qualified for loan approval. It would, therefore, be to your advantage if you could save up at least a 20% down payment. Not only will this help improve your rating to lenders, but you will also not have to pay Private Mortgage Insurance (PMI) and save money.
You must also see to it that you can readily afford to pay mortgage payments every month. Lenders would gladly approve a huge loan amount for you. Keeping up with large monthly payments could pose a problem later on. If you think these payments will put too much financial load on you, then we suggest that you opt for a smaller, more affordable house. A mortgage calculator is a great tool to help you know if you can actually afford to pay for a particular home.
#2 Who is the builder? What are their reputation and building experience?
These could be the most important questions to ask when buying a house from a builder. Your builder’s reputation and years of experience in the business can largely impact the quality of your new home. You need these questions answered satisfactorily since you are shelling out a lot of cash for a well-constructed house.
You can do some research online to verify your prospective builder’s reputation. Tarion is a home warranty protection company in Ontario that has been serving new house buyers and homeowners for more than 40 years. On the Tarion website, you can find out how many homes the builder has constructed over the years, whether they have earned commendations for their work, or if any complaints have been lodged against them.
Also, consider doing a Google search of the builder’s name to see if they have built a good business reputation over the years. Watch out for negative reviews, if any, that could affect your decision in dealing with the builder.
#3 Can the builder provide you with a list of past clients?
Insist on a list of references when checking up on home builders. However, it is very likely that builders will provide an impressive list of their happy customers. If you’re willing to make some effort, ask some neighbours whose homes have already been built about their experience with the builder. Ask them how attentive the builder was with client concerns or if they would deal with the builder again. If you would like to check online, you can find some honest reviews on Angie’s List.
You can also talk to other building contractors who are familiar with the work of the builder you have in mind.
#4 Can you see samples of the builder’s recent work?
One of the biggest problems that buyers encounter when buying a new house is not seeing how the finished work looks until after the contract has been signed. While there is no easy way to work around this, the closest solution is to ask the builder to show you samples of their completed work.
Being able to see samples of the builder’s earlier works offers you a twin advantage. First, you will have an idea of the style that the builder puts into the work, plus the craftsmanship and how it withstood usage, weather, and time. Second, you will have the opportunity to meet other homeowners who can share with you their own experiences with the builder.
#5 Ask which come as standard features and which are upgrades
One of the important questions to ask when buying a house is which features come as standard and which are upgrades. When a builder gives you a base price for a newly-constructed home, it includes all finishes, which are generally of standard quality. You will then be asked if you would prefer to upgrade certain features. Upgrades are added features to enhance the appearance of your homes, such as fixtures, appliances, or flooring materials. They also come at an extra cost.
If you can’t figure out what the builder is offering you, ask them to clarify further. Asking questions is not dumb; losing money for not asking is.
Here are things you should remember:
- If an appliance (a stove, for instance) is included in the base price, check out the model in a showroom. If it’s a standard stove and you’re into gourmet cooking, an upgrade would be sensible.
- When planning to upgrade features, decide which ones you want and what you actually need.
- Decide which features to upgrade early on. Later changes can cost you more.
- Builders slap a huge price on upgrades. Make a thorough study of the upgrade you want. Would it be cheaper to have after you have moved in?
- To turn up a profit, builders generally need to make a quick sale. While settling on a price, ask the builder to include upgrades for free or at less cost. This way, both parties get more value that’s pleasing to them.
#6 Can you conduct house inspections during each stage of construction?
Do not fall for the misconception that a new house won’t have any flaws in its construction. Even the most experienced builders can make mistakes during house building. In case there are defects present in your home’s construction, you need to find them as early as possible. Defects in construction fall under the builder’s responsibility and should be fixed without delay.
To avoid unexpected problems, make sure your builder agrees to a final house inspection conducted by a professional you’ll hire. Professional inspector is a lot more careful than their municipal counterpart when it comes to detecting building code violations. If the builder agrees(they should!), have the house inspected during each stage of construction when potential problems can be spotted early on and fixed before they get worse.
This is one of the right questions to ask when buying a house that can protect your finances. An objection is a warning sign for you to look for another builder elsewhere.
Take a look at this video to see some issues that can be found by doing inspections while a home is being built:
#7 Is the house covered by a home warranty?
Newly-constructed homes come with a builder’s home warranty. It protects you in cases where major structural defects are present in the home and should be repaired. Ask for a warranty from the builder that covers any defect in construction for a certain period after you’ve moved in.
Home warranty coverage varies in length, usually from 1 to 10 years. Know what and what is not covered by your warranty and what its damage limitations are. To ensure that it’s above ground, have your real estate attorney read the warranty stipulations.
#8 Who do you contact during your house’s construction stage?
While you may be able to meet and talk with the builder at the start of your home purchase, you’ll most likely be unable to see them directly during your home’s construction stage. Instead, you will be in contact with a building supervisor or a real estate agent. Whoever would serve as your contact, be sure to know how to get in touch with them and set up a meeting with them if possible.
You will have a lot of decisions to make and a ton of questions to ask when buying a house. It will take off a load of your mind if you know who to talk to directly.
#9 Does the builder have a preferred mortgage lender, and should you use it?
Builders usually have ties with in-house mortgage companies or outside lenders. Some builders can offer you discounts on closing prices if you get your mortgage through their preferred lender. You can use the builder’s recommended lender or find your own financing if there’s one that offers you a better deal. Talk to at least two lending companies so you can compare their fees, interest rates, and terms.
#10 Is a cost escalation clause included in the contract?
Building a new house holds a lot of unexpected twists and turns. You will want to be out of a financial hook if and when they show up. Therefore, this is one of the right questions to ask when buying a house.
A cost escalation clause in the contract will have you shoulder the added cost of unexpected yet necessary manpower or materials. This means if the price of lumber goes up, for instance, before the builder can purchase them, or if an unforeseen delay pushes construction back a few weeks, you’ll have to pay for the added cost out of your own pocket.
If dealing with unexpected expenses will cause you to stress, choose a builder that doesn’t have a cost escalation clause stipulated in the contract.
#11 Is the home’s location safe from floods and other natural disasters?
A home that is prone to flood and other natural disasters can be a source of great concern and added expenses. It can cost you extra insurance coverage as well. For instance, an older home that is built in a federally-designated location that is frequently flooded will require flood insurance.
Similarly, you may choose to buy a resale house in California. You will need to get earthquake insurance since the state is nestled on the Ring of Fire, making it earthquake-prone. Buy adequate homeowners insurance that will fully cover the reconstruction if your property gets damaged. Otherwise, you will end up with huge rebuilding or repair costs in the event a high-magnitude quake occurs.
#12 What made the owner decide to sell the property?
Why does the seller want to leave? This is one of the most critical questions to ask when buying a house. The seller may want to move to a bigger/smaller house or simply need to relocate for a job. However, there could be a host of upsetting reasons that they don’t want you to know.
Is the house in an unsafe neighbourhood? Is the area plagued by constant flooding? Is the busy and noisy street keeping the residents up at night? Sellers are bound by law to disclose any conflict they have with their neighbours.
The length of time the seller has lived in the house is another important piece of information to know. Consider it a great concern if the owner decides to move out in a hurry. There is certainly a strong reason why the property is up for sale.
The seller may not always give you the true reason, but asking this question can help you gauge how motivated the owner is to sell. You can then estimate your chances of hammering out a favourable deal. The seller could even offer you a lower price if they are really serious about making a quick move.
#13 How long has the house stayed on the market?
The length of time a house spends on the market could be longer due to its high price tag, the result of a bad pricing strategy. If a house has stayed too long on the market, its listing becomes “stale” and makes it harder to sell. Prospective buyers may get the impression that there’s something basically wrong with the property, or it would have been disposed of quickly.
If the property has been on the market much longer than expected, the owner may be motivated and willing to make a deal. This can work in your favour and give you more opportunities to negotiate the price, terms, and conditions of the sale.
#14 What does the sale price include?
Buying an existing house generally means acquiring everything in it that is considered fixtures. These include faucets, cabinets, dishwashers, built-in bookcases, and window blinds. In most cases, outdoor play equipment, landscaping, the plants in it, and sheds can also be considered fixtures.
On the other hand, you may believe that certain items are included in the sale, but in fact, they are not. The law varies from state to state. By right, sellers should make it clear in their listing description what items they do not include in the sale. Unfortunately, this is not always complied with.
Be certain that you are well informed about what is included and excluded in the property sale. Get it in writing, if needed, to avoid any misunderstanding. Do you actually want the built-in refrigerator or the wall-mounted audio systems? Ask if these items, as well as other home fixtures, are included in the price.
#15 What are other problem areas that you should know about?
Of the numerous questions to ask when buying a house, don’t allow this one to slip your mind. You may not get a thorough answer from the seller or even a truthful one, but you’ll surely get some ideas of the neighbourhood’s problems before signing along the dotted line.
- While its rules may vary according to state, sellers are usually bound by law to make disclosures about areas of concern such as natural hazards (like flooding), use of lead-based paint, existing liens, a leaky roof, termite, mould, or water damages, disputes in property boundaries, and defective systems (electrical, plumbing, etc.), appliances, or fixtures. If there are other problems with the house, you should find out about them in advance in order to negotiate the cost of repair. Also, consider a complete professional inspection for issues the seller isn’t aware of or has deliberately kept secret.
- Find out about the age and condition of the house’s principal sections to make yourself prepared for potential repair costs in the future. Ask about the roof, which should hold out for 15 to 50 years, according to the quality of the material used. Likewise, find out about the state of the house’s electrical, plumbing, and septic systems, heating, and cooling systems, water heater, and appliances.
- Local building authorities require a building permit for any house repair and/or renovation. Without it, the owner won’t be able to make improvements such as new roof installation, the addition of new rooms, addition or major upgrades in electrical and plumbing systems, as well as the installation or replacement of the heating, venting, and air conditioning (HVAC) system in the house. If no permit has been issued when such improvements were made, a local building department official can force you (if you bought the house) to get the required permit to comply with the current building code.
- Neighbourhood problems and nuisances may include busy streets, poor street lighting, traffic noise, untidy surroundings, lack of sanitation, maintenance problems, barking dogs, unpleasant odour, and loud neighbours that create disturbances. You can check out the local police department for neighbourhood crime rate information.
- Flawed construction and faulty repairs can take their toll on your finances, emotions, and even your mental health. It’s best to know whether the renovations and repairs in the property were done by a professional builder or by the owner themselves.
#16 What did you love most about your home and neighbourhood?
This will come as an unexpected question to the seller, but it can get them to talk to you about their experiences in their home and its neighbourhood. You might be surprised it was not all be bad experience. You may learn the good things about the home and its neighbours that you may not have expected otherwise. You’ll feel good to know about its peaceful community, the flower-studded hill just behind the property, the house’s low heating bills, its friendly and caring neighbours, and the way the living room lights up when bathed in the early morning sunshine.
Buying a house, whether new or resale, can make you feel like walking on cloud 9 or trampled by wild horses, depending on the seller you deal with. If there are issues you need to clarify or points in the agreement that you want to be explained, go ahead and talk to the seller. It is, after all, your next house that you’re concerned about.
Read everything in the contract and question anything you don’t understand. Do not sign anything you don’t fully understand. If all of this legal stuff is way over your head, hire a real estate attorney.
If you prefer to purchase a house where the basic infrastructure is already in place, then probably a resale home would be right for you. Take note of the house’s condition, neighbourhood, design and structural flaws (if any), and the owner’s reason for selling. Talking to the seller about these and other concerns can help you know what you’re getting into and even open a window of opportunity to negotiate the price.
You could encounter a lot of potential problems when shopping for your next home. With that in mind, practice due diligence and keep in mind these questions to ask when buying a house. They will help you avoid most of the pitfalls that come with the purchase of a home. Remember, the more questions you get answered today, the fewer problems you will likely encounter in the future.