Tips for First Time Home Buyer

21 Mar

March 20, 2016

We are coming into a strong spring market.  The inventory, or number of homes on the market, is low compared with the number of buyers.  Let’s face it, mortgage rates remain at an all-time low.  Twenty years ago, if the interest rate went up 1%, the result was a 10% +/- increase in the rates.  Now a 1% increase is equivalent to a 25% +/- increase.  Buyers are jumping in while they can.  Many first time buyers do not stop and ask for independent advice from someone who has no stake in the transaction.  The same applies to buyers who have not really paid attention in the past.

Here are a few tips, based on the experience of representing home buyers and sellers, for over 40 years.

  • Write down everything the seller or seller’s agent says in an effort to sell you the house. (I will tell you what to do with this in a moment)
  • Take note the standard agreement of sale has a clause (called an integration clause) which in essence says: We the buyers did not rely on the sellers’ disclosure or anything said to us and therefore none of those representations were part of our decision to buy the house.   We all know that is not true.
  • Amend the agreement of sale BEFORE you make an offer to fix the following issues at a minimum:
    1. Amend the integration clause to include, as part of the agreement, both the sellers’ disclosure and the representations made to induce you to buy.
    2. Limit the exposure you have, in the event of default, to your deposit as liquidated damages. (We can help you with this)
  • Get the best home inspector you can find and slowly, and carefully look at everything in the house. The big issues are:
    1. The roof, flashing, downspouts and gutter:  this includes a thorough inspection from the underside of the roof.  Make sure you check for ventilation of the space under the roof and for signs of mold or mildew.  If it is too hard to get up into the space under the roof, remember it is not too hard for water or mold…..check this space thoroughly.
    2. The basement: This really includes inspecting the manner in which the lot is excavated, so you know where the water will flow if there is a 6” rain on top of ground that has been frozen for 2 months.  In the basement, look for signs of water entry or the cover up of water.  A rust line on the furnace or the steel lolly columns is a giveaway.  If you see white powder on the wall, this may not indicate water entry.  It could mean water is flowing inside the wall to a drainage system.  Look for a well-used sump pump.  In the ideal home, there will be drains in the basement floor which connect to pipe that flow outside to a location LOWER than the basement.  Check out all mechanical systems (hot water, heat, AC, pipes, electric) throughout the house.  Make sure ALL drainage pipes go either to the public sewer or to the septic system which you will inspect.  Beware of a grey water system.  Look for structural defects in the walls, the steel and the wood.
    3. Stucco, or artificial stone. Defective stucco or stone is caused by many things.  Often the roofer will install the rake board before the stucco.  That is the wrong order. Many stucco installers fail to create a water channel behind the stucco, or they fail to create weep holes at the bottom for the water to get out.  The first cousin of the stucco problem is failure of windows.
    4. Water in the living areas. I know, we are back to water!  Look for fresh paint, patched ceiling and signs of little black spots on ceilings.
    5. The septic system and water. You need an absolutely clear septic system report.  All repairs must by pursuant to a health department permit.  Check water for both quality and quantity.  You need about 4 gal/minute continuous yield from the source.
    6. IF THE SELLERS OR THEIR AGENT explain away any problems discovered in the inspection, amend the agreement of sale to include an inclusion of that statement as an item not excluded by the integration clause.
  • Consider a survey. If you do not have a survey, you may find the fences are not on the borders, that the house is not on the lot that a pipeline goes through the front or backyard.
  • Title Report. Yes, this is an important part of the inspection process. Order your title from a company that is independent of the parties that will profit if the deal goes through.  Companies owned by sellers or real estate agents may have a conflict, if a title issue arises which should end the deal unless it is corrected.  Our related company, Academy Professional Settlement Services, can handle this for you, and when you use our company, we do not charge for attendance at closing in most cases.
  • Talk to the neighbors. They may know about issues that are not immediately apparent.

 

Don’t be afraid to hire a lawyer.  We are real estate lawyers.  We can help you quickly an inexpensively.  Our average billable time in a normal home purchase transaction is less than two hours.