| r in this series you have learned how to identify | | | | suggesting two articles later. |
| houses that can be purchased below market price | | | | If you are close (not on the moon or in Two Rivers, |
| and you are about to buy the first house. Putting | | | | Wisc) use one of the most powerful real estate tools |
| your money on the line is where the risk begins. So | | | | ever: Talk to the neighbors. Probably the best power |
| let’s look at what you have to do now to | | | | tool ever for home buying is a nosey neighbor. |
| cut the risk way down. | | | | And let’s face it. Most of us are exactly that. |
| The four elements at this stage are: | | | | We want to know the problems our neighbors have |
| 1. Who really owns the house now? It better be the | | | | and we noticed that the plumber’s truck was |
| person you name in your contract as the seller. | | | | there far more than anyone should need. |
| 2. What is the house really worth? Location, | | | | Don’t interrogate the neighbors, just chat. Tell |
| amenities, market and rental value, condition? | | | | them you are thinking about buying the house and |
| 3. How much money leaves my pocket now and | | | | you hope they can help. Ask if they know how much |
| later? | | | | it could rent for. They may say “no.” |
| 4. Who will be responsible for the house after you | | | | If they do, you say “I know you are not a |
| buy it? Most folks think it should be them. | | | | rental agent, but if you did know how much houses |
| For the majority of people these may seem like | | | | are renting for?” You will be surprised. |
| pretty simple requirements. Most people buy a few | | | | And! Google the address and the name of the seller. |
| houses in a life time. The more houses you buy and | | | | That has saved me thousands of dollars. Frequently it |
| especially the more you buy at really cheap prices | | | | has let me know how flexible the seller is willing to be |
| where you will be able to have double digit profits by | | | | and why. If a few attorneys general are looking for |
| renting the houses, the more likely you are to run | | | | the seller, the price just went down. |
| into someone trying to sell you a house they do not | | | | Look the rental value up in as well. |
| own. | | | | Be sure to have a clause in the contract to purchase |
| Sometimes this is really innocent. The person trying | | | | that your offer is conditioned (or subject to) your |
| to sell the house to you did BUY it, but something | | | | total personal satisfaction with the findings of a home |
| went wrong then or there are liens or other | | | | inspection. |
| “strings” attached to the house since | | | | Do not do the home inspection until you have a |
| then. | | | | contract approved by the seller and you have |
| In a few cases in my experience, the seller did not | | | | decided you want to buy. The inspection will cost |
| own the house, but thought they did. For me this has | | | | $300 to $500 (it is negotiable) and the money should |
| usually been the case where a husband or wife has | | | | not leave your pocket until you are as sure as you |
| left and has no interest in what happens to the | | | | can be you want the house to rent out. |
| house and the spouse that is living in it thinks they | | | | If you are in the area, go with the inspection. If you |
| own the entire house. | | | | have never bought an investment house before, it |
| In one case, the seller told me that his lawyer (who | | | | will be a great education and will give you a good |
| was now a sitting judge) had told him that he did not | | | | idea of how much repair and maintenance will be for |
| need his wife’s approval to sell the house. | | | | the next few years. Crank this estimated expense |
| Hard to believe that any attorney does not know | | | | into your offer to buy. |
| real estate law, but frequently that is the case. A | | | | You may want to abandon the offer to buy or |
| family law attorney or personal injury attorney will | | | | renegotiate the price based on the finding of the |
| not know all the details that a board certified real | | | | professional. Your Realtor may have a |
| property attorney will know. | | | | recommendation on who to hire for the inspection or |
| Fortunately for you, you also do not need to be an | | | | you can use Angie’s List or the web for |
| expert in real estate law if you follow this one key | | | | home inspectors. |
| rule: Never close an agreement to buy real estate at | | | | At every step of the way, keep your cash close. |
| the seller’s kitchen table. Get the contract | | | | Earnest money for the contract, if you are buying |
| signed and turn it over to a title agent or attorney | | | | from an individual should be $10 to $100. You will |
| who specializes in closing real estate transactions. | | | | probably have to put $1,000 down if it is bank |
| They will do a “title search” and find | | | | owned, which is a good reason to try to buy from |
| out who really owns the house and who needs to | | | | an individual. |
| sign the deed transferring the home to you. Good | | | | In addition to willingness to accept less earnest |
| news! This should also be free. Check with the | | | | money, real people are easier to deal with and can |
| attorney or title agent first, but the examination of | | | | usually give you an answer to counter offer or |
| title should be free. If the “seller” | | | | questions much sooner. |
| does not own it, they cannot sell it, and I have never | | | | They also are more likely to be bright enough to |
| paid a title agent or attorney when we were not | | | | understand any creative features to your offer. |
| able to close the sale. | | | | And finally, once you have gone thought all this |
| So how do you know what the house is worth? | | | | effort to purchase, do you want to be responsible |
| First ask the Realtor who put the offer in for you to | | | | for the house? I suggest that there is a legal way to |
| do a CMA. This stands for competitive market | | | | own the house that takes a lot of financial |
| analysis. The Realtor will do it by searching the real | | | | responsibility off of your shoulders. |
| estate agent computer of similar houses that have | | | | In the next article in the series we will look at that |
| sold within the last three months in the area and | | | | legal loophole to cut your liability for the ownership of |
| comparing your specific house to the average sale | | | | the house and in sixth article in the series we will |
| prices in the neighborhood. | | | | explore some of the “creative” |
| If you are getting a loan the bank will want an | | | | elements you can put into your contract to buy the |
| appraisal and want you to pay for it. It’s part | | | | house. |
| of the price of getting a loan from a bank. Better | | | | |