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It can be all too easy to get snookered on a home purchase if you don’t do the right research and due diligence.

Whether you’re looking for a home as your residence or an investment, you need to be aware that homes can carry hidden costs. Damages. Legal liabilities. And sellers aren’t always eager to share that information.


by Highland Homes via Flickr

That’s why I recommend that you research a prospective home as in-depth as you need to, looking at factors including the following.

Check Out the Neighborhood

First impressions can be deceiving. A home that otherwise meets your criteria could turn out to be in a far more dangerous or inconvenient location than you expected.

Determine how close the home is to resources that matter to you, like freeway access, grocery stores, and schools.

If you’re not sure about the safety of an area, drive to the home at different times of day. If it gives you the creeps to be there at night, reconsider.

Know the Sale Price for Nearby, Similar Homes

One of the keys to ensuring you receive a fair deal on the purchase of a home is to learn how much nearby homes are selling for. Often, a real estate agent will research this for you. The number you arrive at will be key to negotiating a fair price with the seller

And if you’re planning to rent out a home, do the same research but for rental rates. You can use these figures to estimate how much you’d charge and if the property can be made into a profitable investment.

Hire a Good Home Inspector

Some wear and damage to a home might be easy to spot, such as cracked walls. However, a good home inspector can be your lifeline and more than pay for himself by letting you know about any structural or hidden problems.

A good inspector may find damage or point out that major appliances like heating systems will need to be replaced soon.

Use this intelligence to determine if you’re going to buy the house or to address these problems in your negotiations with the seller.

Estimate the Cost of Upgrades and Maintenance

Seek estimates from contractors to determine just how much you may need to pay to get the house into the condition you’d like. This is vital to determining whether to invest in a home and can prevent unpleasant surprises if you plan to live there.

Determine if the Home is Legally in the Clear

It’s an unfortunate fact of life that zoning and permitting violations will be assessed against the current owner of a home, even if it was a previous owner who committed the bad deeds.

If a home doesn’t meet zoning standards, it may turn out to be grandfathered by the city and should present no obstacle to you. But you need to find out for yourself.

Also, cities may take harsh actions against homeowners whose houses include work that was completed without a permit. You could potentially pay dearly.

Understand All Closing Costs

The initial cost of a new home can go well beyond a down payment. Look into points, fees, insurance requirements and other expenses that may be included as terms in the sale of a home.

Novice real estate investors looking to flip homes often forget to account for these costs. They may lose money in a flip, even though they sold the property for a higher price than they purchased it.

Also, you or your real estate agent can negotiate some of these costs. Knowledge is key.

Heather is a staff writer for Lifestyles Unlimited. She enjoys analyzing real estate investment trends, laws, and practices while debunking myths. As the owner of multiple rental properties and “flipped” houses, Heather believes that Real Estate Investors help put money back into the North American economy.
 

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