8 Questions to Ask Before Making an Offer
Spring is here which is the busiest time of the year in Calgary real estate market. Buying your dream home is an exciting process however, it is also one of the most important financial decisions for most people. Therefore it is important to take your time to do your due diligence.
After finding the right home ensure that you are not overlook important factors Because once the purchase contract is signed by both parties it is irreversible. Here are some important questions to consider before making an offer.
1. What is the market value of the home?
Before signing the purchase contract it is vital to know the market value of the home. This will prevent you from overpaying for a property. After all, no one likes to overpay for anything, especially in a major financial transaction.
One of the best ways to determine the market value of the home is to review Comparative Market Analysis (CMA) report. This report contains recently sold & currently listed homes that are comparable to the subject property.Comparable homes in the report must have similar characteristics to the home you would like to purchase. This is an effective tool that will help you determine market value of the home you want to purchase. Ask your real estate agent to prepare a CMA and analyze the report to determine how much to offer for a house.
2. What is the sales history of the home?
When did the current owners purchase the house and how much did they pay? REALTORs can easily obtain the history of a house. Although the price sellers paid is irrelevant to the market value of the house it is good information to know. It will become handy in the negotiation process as it should give you an idea of what the sellers are expecting.
Are the seller’s asking price is significantly higher than what they paid for? This can happen in some markets but highly unlikely in the current Calgary real estate conditions. Look into justifying the price difference, have they done renovations to the house? Look into finding out more about the additions.
Also, you should be alarmed if the sellers lived there for a short period of time. Find out from the sellers why they are selling in such a short time. This does happen from time to time but ensure that sellers are not moving because the property has problems.
3. Are there any issues with the house?
Before making an offer on the house and becoming emotionally attached to the property. Find out if there are any issues with the property. Sellers are legally obligated to disclose material latent defects. Latent defect means issues that are not easily discover-able such as, water damage or crack in the foundation.
However, sellers are not obligated disclose smaller issues such as broken window or wall. Buyer’s must carefully analyze and ask specific questions to find out as much as you can before submitting an offer.
4. Are there any future developments in the neighborhood?
It is important to do your due diligence about the neighborhood before making an offer. Future developments can drastically affect the value of the home. Luckily, these types of developments often takes years to come alive so you can easily inquire by asking your agent or by calling the City.
If there is a highway, shopping center or a school is being built near the neighborhood, you would want to know. Not only will these types of developments can have big impact on the value of the home it will also affect the appeal of the neighborhood.
5. When was the home built?
Built year of the house can tell us a lot about the house. Such as the age of the mechanics, roof and more. Owning a home costs money but doing a little research can save you on big ticket items.
For example if you are making an offer on a home where the furnace or the roof is nearing it life expectancy, it’s vital to know these so you can negotiate accordingly and budget your self for the replacement costs.
6. What is the sellers timeline?
Its important to figure out the sellers timeline before making an offer. Does the sellers need months to move out? Do they need to close as soon as possible?
In some cases sellers need additional time to move out so it’s good to check the sellers timeline match with yours before you get emotionally invested in the property.
Not only that, knowing the sellers timeline can be an important factor in the negotiation process. Sometimes the possession date can be more important than the price to the sellers. This way you can give them the time to save on the final price.
7. Are all the permits in order?
It is important to ensure that sellers have all the required permit. This is common issue with basement developments. Sometimes sellers do the work themselves or dont want to deal with getting the required paper work. This can cause problems when you are trying to sell the property. More importantly, god forbid if something happens to the house such as busted pipe or fire caused by electrical insurance will not cover the damages if the development doesnt have permits.
Another example is seen at older homes when the seller builds a garage in the back lane without following the required steps. Sometimes the new building is encroaching on to the city property or its built on utulity right of way.. Since the building cannot be moved it will have to be destroyed which can be costly.
8. What are all the closing costs?
It is important to know all the costs before making the offer so you can prepare yourself. Some costs include:
- Home Inspection usually costs $500.00$
- Condo document reviewer (if buying a condo), typically costs $400 – $500
- Finance costs ask your mortgage broker for detailed break down of these fees.
- Lawyer Fees usually costs $1000 – $1200
- Property Taxes
- Homeowners Association Fees if applicable, some homes have HOA fees which is paid annually to upkeep the parks and playgrounds within the community.
- Moving costs
Asking these questions before submitting the offer will prevent you from making a costly mistake. Also, this is only a short list of questions to consider and they may vary depending on the property. It is important to work with reputable real estate professionals which will make buying the process smooth as possible.