What should I be aware before giving an offer?

Asked by Siva, 07095 Fri May 15, 2009

After looking into the house in detail and researching the school district, neighborhood etc., what points should I consider before buying a home? Since new homes are very limited in NJ, most of us end up buying 50 to 60 year old home. Thus, what things we should ask the agent?

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Antoinette S…, Agent, Mountain Lakes, NJ
Sat May 16, 2009
Hi Siva,

Reviewing the seller's disclosure is an important first step as previously mentioned. Although your agent is not a home inspector, as we have been through hundreds, most times thousands of homes through our careers, most of us have developed an eye for "red flags" in a home. Your agent should be very forward about pointing out possible problem areas in a home. Effervescence (white marks) on basement walls, staining on ceilings that may indicate water problems, etc. If too many of those "red flags" keep popping up, you may want to pass on that home. After attorney review, you'll have an opportunity to bring in a home inspector to conduct a professional inspection. Attend the home inspection and ask the inspector plenty of questions as he moves through the home. They offer a wealth of info that you'll always value, in both recognizing problem areas and smart home maintenance.

Older properties can make wonderful homes however, especially when well maintained by the current homeowner. Also consider purchasing (or asking the homeowner to purchase) a one year home warranty. Home warranties cover most operating functions that can malfunction during the course of ownership. Plumbing, heating, central air: these items and more would be covered under a home warranty. The company I use is American Home Shield. Check them out at http://www.ahswarranty.com for more information.

Your agent should also prepare for you a comparative market analysis to determine what similar homes have sold for, in that particular town, in the past six months. They should also run the history of the subject home itself, to determine when the home was purchased and review any possible improvements that have been completed.

Good luck with your home search!
1 vote
Joe Chang, , Paterson, NJ
Sun May 17, 2009
A Contract that is negotiated and prepared by lawyers is binding immediately upon signing. However, a Contract prepared by a real estate broker, in New Jersey, must have an "Attorney Review Clause". This allows for a three day period (defined as three non-weekend, non-holiday days) during which lawyers for the parties can review the Contract and reject same for any reason or no reason at all. While not required, the lawyer can recommend changes that may be acceptable to allow for the reinstatement of the Contract. A non-lawyer cannot reject the Contract; this can only be done by a lawyer. If not rejected within the three day period, then the Contract becomes binding. No one is bound during the attorney review period. Until then, the Seller is able to entertain and agree to any other offer he desires. Unfortunately for you, this is sometimes the result of the requirement for the attorney review period.

*Please note that this is general information only, and not to be construed as legal advice, if you would like a consultation please feel free to call and make an appointment"
Law Offices of Chang & Scolavino, LLC
Paterson and Freehold, New Jersey
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1 vote
Donald Hansen, Agent, Gillette, NJ
Fri May 15, 2009
Hello Siva,
Hope you are doing well. When you are looking out older(and newer too) homes you want to ask for a seller's disclosure from the listing agent to find out what the owner knows about the condition, both past and present about the house. The agent themself should give you their insight about anything they see with the condition of the house that might be of concern. Remember as well that most contracts of sale in New Jersey have contingencies for inspections so you can have knowledgeable people examine the house for any defects before you complete your purchase.
Some things to consider with older homes..... many are located in the most convenient areas of a town since towns usually develop outward....bedrooms in general are smaller, living rooms bigger..... and lastly, that all homes become older homes. Even your 1-5 year old home today will need updating 10 years from now.
Call me if you have more questions.
1 vote
Victor Kamin…, Agent, Edison, NJ
Mon Jun 8, 2009
Ask your agent to obtain a property disclosure from the seller, hopefully they were honest when filling it out, if not you can sue them later ;-)

Ask the agent to run comps for you, in front of you so that you don't over pay for the house and make an offer at what comparable homes are selling for, maybe slightly less if you can.

Ask the agent if they area aware of any external obsolescence factors that will affect the community or value in the future.

External obsolescence is a reduction in value caused by an undesirable factor outside the property. Locational obsolescence, external obsolescence, economic obsolescence, and environmental obsolescence are all types of external obsolescence. External obsolescence is generally not curable.

The following are examples of external obsolescence

• Construction of a landfill or industrial site next to a residential neighborhood will cause values to decrease (locational obsolescence).
• Construction of a government subsidized apartment complex next to a residential subdivision will cause values to decrease (locational obsolescence).
• An increase in interest rates will cause values to decrease (economic obsolescence).

External obsolescence is rarely (if ever) curable
A home inspection is the only way to be sure your not buying a lemon, add on a home warranty or better yet ask the seller to see if they will pay for one for the first year and protect your future asset.
(Definition Courtesy of georgiaappraiser.com)
0 votes
Erik Farber, Agent, Watchung, NJ
Tue May 19, 2009
Hi Siva! I actually list and sell quite a few homes in Fanwood, Scotch Plains, Westfield and the surrounding towns. Having said that...There a number of points to consider. For one, you want to know what comparable homes are currently selling for in the area. In this market, which is to say, a declining market, it helps to know what the most recent sold prices have been. By recent, I mean the last 90 days..maximum. It cannot be said enough that real estate is local, and while one town may have many homes for sale that are short sales, foreclosures, etc., another town 5 minutes away may have very few of these "distressed" properties, and may in fact still be what we would consider a seller's market, where the average days on market is well below six months. Although prices in general have continued to decline this year, it is important to note that some areas, Fanwood being one of them, have performed quite well throughout the real estate correction that has taken place since late 2005. I also suggest asking for the seller's disclosure for any properties you may have serious interest in. This is not a legal requirement, nor is it a legally binding document, but it does answer some questions as to how the subject property has been maintained by the seller, whether or not they are aware of any underground storage tanks (oil tanks being the primary interest, although septic is also possible), the condition of the roof, whether or not they have ever had water issues, etc. Another key thing to know is whether the property as been listed previously. Sometimes a home may appear to be on the market for two weeks, when in reality....it has been on the market for a year and six months and two weeks....and may have been listed by several different agents during that time. That may give you leverage during negotiations, should you choose to make an offer on a property. If you are buying a home, any home....new construction included, I cannot emphasize enough how important it is to have a thorough home inspection, and an attorney who specializes in real estate specifically. It is also nice to know what is near the property, particularly if you are seeking a home within walking distance of schools, shopping, trains, etc. One of the sites I like very much for this is http://www.walkscore.com . If you have any additional questions about homes in the area....please let me know if I may be of any further assistance! Good luck in your home search!
Web Reference:  http://www.erikfarber.com
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