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Buying a Home: Suggestions

Few people are experienced in buying a home so here is some helpful information you won't find anywhere else. You have to realize that every facet of homebuying is geared to get you to buy and close. The real estate agent, mortgage company, title company and insurance carrier do not make money unless you close. Take your time selecting a home. A national study notes that people spend more time picking out a home computer or automobile than they do their biggest financial investment in a home.

General Informational

1. Get pre-approved for a sales price range before you start looking but don't share this information without realizing that it may not be confidential. Pre-approved buyers have more clout in the marketplace. Keep your financial condition to yourself until you are ready.

2. Never buy on emotion. Your purchase should be based on sound financial reasons. Many people end up selling their home as they can no longer afford them or found out they were a money-pit. Skyrocketing property taxes and insurance from year to year are forcing many to sell their home. If you are buying on emotions, you don't need an inspection. Your mind is already made up to purchase with the cards stacked against you.

3. Never buy up to your maximum mortgage qualification. The true cost of home ownership is your mortgage payment plus 45% according to Susan Orman, one of the countrys' leading financial experts, to cover the total housing expenses you need

4. Read and understand sales contracts before you sign. If you have a question - ask! Have a real estate attorney review the contract with you if you have questions or do not understand what you are signing.

5. Ask to start the appraisal until after the inspection. That way if the house doesn't work out or can't be negotiated  then you are not out that high fee for computer record comaprisons. The appraisal is done on behalf of the lender; not the buyer. You just get to pay for it.

6. Check the national CLUE database for previous insurance or water claims. Some homes may be uninsurable or subject to higher premiums based on a past claim history. This also helps in seller disclosure.

7. If the property is in Galveston or Brazoria county or southeast Harris County check with the Texas Dept. of Insurance to see if a windstorm construction certificate is on file that is required to obtain windstorm insurance. Many times a year people call to schedule an inspection only to find out there is no windstorm certificate on file which in effect, makes the property uninsurable. Others call to try to get a windstorm certificate after they closed because no one checked. The process of certification starts before the foundation is poured so unless you are willing to tear down the house; you're bascially out of luck. (This includes all 14 first-tier coastal counties in Texas). Note: under the search it may be best to leave out "city" to find the file or a variation of street names or call them.

8. Check to see if you are in a flood plain or area subject to flooding. It's free!  By all means consider flood insurance in the Gulf Coast region.

It is recommended that you obtain as much history as is available concerning any property you are thinking of buying before you sign a contract. This  information may include copies of any seller's disclosures, previous inspection or engineering reports, reports performed for or by relocation companies, municipal inspection departments, lenders, insurers, and appraisers. You should attempt to determine whether repairs, renovation, remodeling, additions or other such activities have taken place at this property. Visual inspections are considered the start of a due diligence investigation by the buyer and not the final or end of due diligence.

A seller has a duty to disclose known defects and can be held liable up to 4 years after the sale for failure to disclose. As an example, sometimes a plumber comes out for a repair only to tell the new buyer that he told the previous owner that the sewer needs to be replaced. This should have been disclosed.

I had a seller disclosure showing no foundation problems. An easy check of the tax rolls (below) showed the property with foundation questions. The buyer asked the seller who said he knew of no problems. Well, the seller previously filled out the paperwork with the appraisal district to legally testify that he had foundation problems in order to lower his property taxes. The on-site inspection showed he had foundation problems readily visible  as evidenced by cracked brick, cracked sheetrock and sloping floors.

Home Buying Research

Problems, Safety Hazards and Concerns in Homes.....Click here

Resale Estimated Cost of Repairs: generally figure 3/4 of 1% of the sales price for each year age of the property for repair and maintenance.

Are Real estate Appraisals the New Organized Crime in Real Estate? Click here

County Appraisal District Information - A Valuable Resource
Who owns the property? How big is it? Who are the various taxable entities are? In the County? In the City?

Curious About Home Values in the Neighborhood? Digital Images of the home and links to other information......www.zillow.com

Insurance: Is the Property Insurable? Do not assume it is.......click here

Is the Property In a Flood Area?  - See if the property is in a flood area. In some cases you will need to pay for an elevation certificate via a licensed land sureyor in order to determine if you can get flood insurance and at what cost. You should ask the seller to pay for this.

FEMA Flood Maps of Your Property or Area -
FEMA flood maps of the property

Flood Smart.Gov - Official site of the National Flood Insurance Program

CLUE: Comprehensive Loss Underwriting Exchange
- Know about previous insurance claims. Media article on importance of getting a CLUE report.

CLUE Home Site - Previous claims can black-ball a home from insurance. The CLUE report can also tell you about the conditions that may not be disclosed by the seller.

Questions to Ask Your Realtor BEFORE You Buy - Insurance in Coastal Counties is not the same inland

Windstorm Insurance and Construction - Insurance in Coastal Counties is not the same in inland. If you don't read this then shame on you.

Greater Houston Area Flood Insurance Rate Maps (FIRMs) (not a NFIP site) - Including Harris, Fort Bend and Montgomery counties

Harris County Flood Map - (not a NFIP site) - Flood Map. Provided by the Tropical Storm Allison Recovery Project (TSARP)
 

Harris County Appraisal District - On-line records, maps, forms, etc for properties within the Harris County Appraisal District.

Galveston County Appraisal District - On-line records, maps, forms, etc for properties within the Galveston County Appraisal

Brazoria County Appraisal District - On-line records, maps, forms, etc for properties within the Brazoria County Appraisal District.

Chambers County Appraisal District - On-line records, maps, forms, etc for properties within the Chambers County Appraisal District.

Montogomery County Appraisal District - On-line records, maps, forms, etc for properties within the Harris County Appraisal District.

Ft. Bend County Appraisal District - On-line records, maps, forms, etc for properties within the Ft. Bend County Appraisal District.

Waller County Appraisal District - On-line records, maps, forms, etc for properties within the Waller County Appraisal District.

If you live in one of the 14 first-tier coastal counties along the Gulf Coast or east of Hwy 146 in Harris County then you need windstorm insurance. Your real estate sales agent should check to see BEFORE YOU MAKE A OFFER if the property has a windstorm insurance certificate or qualifies for windstorm insurance. Some new built properties don't have certificates due to builder negligence, engineer forgetfulness or the certificate was cancelled by the state. Homeowners insurance does not cover damage caused by hurricanes or wind related storms. A property with a windstorm insurance certificate means the property was designed, inspected and certified to the state of Texas by  a windstorm engineer.

Windstorm certificates are also required for new roofs, renovations, various repairs, remodeling and additions. For more information contact the Texas Dept. of Insurance.

Used Home Limited Warranties
The real estate salesperson can arrange to provide home warranty insurance on the used homes they list or sell. That sounds good but buyer beware!  These insurance policies do not cover pre-existing problems, structural items of any kind and equipment or appliances near the end of their serviceable life.  There are different policies so compare all of them before you decide. Read the fine print!  see below

Home Warranties (aka: Residential Service Contracts)

Residential Service Contracts - "Home Warranties" do not cover components or systems which do not work or are clearly near the end of their mechanical life. Every approved contract offered in Texas excludes pre-existing problems, and purchasers who try to get pre-existing problems corrected will always end of dissatisfied". source: Texas Real Estate Commssion Advisor July/August 1992.

A property inspection is not a home warranty, expressed or implied, nor were the Texas inspection standards designed for the purposes underwriting, guarantee or warranty. Any claim by a seller or real estate agent should be secured in writing prior to closing. Always insist on a recent and complete seller disclosure form for all resale real estate transactions prior to entering into a contract. The seller disclosure form should be a very important document for you to decide on whether to make an offer or not.

Resale Estimated Cost of Repairs: generally figure 1/4 of 1% of the sales price for each year age of the property for repair and maintenance.

9. Before you buy call your real estate inspector and discuss the house. Clean and pretty has nothing to do with structural or mechanical issues.

10. Obtain as much information as you can about the property before you sign a contract. If information is not supplied to you from the seller that may be a red-flag. Obtain any permits or call the local city about any previous remodeling projects or significant repairs. Find out who did the remodeling or repairs. Get copies of the contractors contract and invoice for verification.

11. If the foundation has been repaired get copies of the engineering analysis and contractors contract to verify how and where repairs were done. If you can't get copies this may be a red flag.

12. Knock on neighbors doors or call them. You can get neighbors names from the county appraisal district web site and then look up the names in the phone book

13. In every case, get the property inspected from someone you select. The names from a sales agent provided short list should be a big red-flag to you. You need to ask yourself how those names got on that special list. Always look for an inspector that represents buyers but always remember - not all homes can be inspected. Fixer-uppers need a contractor, not inspector, unless you want to pay big bucks. The state does not certify inspectors so the only national certification is being code certified which is different than being a professional member. Professional members are not code certified. They pay dues to join the code council only as a member. Code certified inspectors were subject to intense studies and examinations with continuing education.

14. If you can, have the property inspected before you make your offer or demand a minimum 10-day or longer option period. The less than 10-day option period may prevent you from securing the best inspectors and leaving you less time to make a decision or obtain additional inspections and repair estimates from contractors. The best inspectors are usually booked in advance as they mostly work from client referrals.

If the home was built before 1978 you have an automatic minimum 10-day option period as lead-based paint may be present. Use the 10-day option period in all cases whether you think you need them or not. If you don't use all 10-days then it doesn't matter. At least you have them. Never opt for less than a 10-day option period in any deal. There's much work to be done in those 10-days so don't you or others pressure you into making a bad decision.

15. The more credit checks that are done, the lower your credit score. Interest rates and insurance can be affected by your credit score so do all the homework you can beforehand. Each credit checks drops your FICO score.

16. Unless you have sufficient funds do not buy a car, boat or furnishings until after you close. In many cases these purchases have knocked people out of getting mortgage approvals. That's also a signal that you really can't afford it anyway.

17. A sales agents only duty is to enforce and monitor the sales contract. Their duty to the seller is to bring the sale to a successful closing. That's how they get paid - a percentage of the total sales price at closing. The other option is use of a exclusive buyers agent but you need to shop around to make sure that's what you are getting. The real estate sales community is a tightly knit industry and like any industry has its share of good and bad apples. Personal attention is required in lieu of fast-track volume. 

Unless you know who you are dealing with never share confidential information as the sales agent may have a duty to tell the seller that information if it's in the sellers best interest.

Remember: only you can protect yourself and any purchase is your sole decision

281-337-4052

Home Inspections since 1989; New
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