House-Hunting challenges home buyers must face on their journey are many and varied. Every home mortgage story is different and comes with individualized personal and financial House-Hunting challenges. And Love. Yes, we know that the ultimate end to House-Hunting is a marriage to a house you love.  House-Hunting is like dating. Therefore, in this blog, Palm State Mortgage Company will teach you the top 3 basic challenges that every House-Hunting home buyer must face, no matter who they are or what home they are buying.

Likewise, these are the top 3 basic issues we wish you could understand before falling in love with a specific house.  House-hunters, be aware of these challenges before you seriously shop!

On the surface, these 3 challenges seem simple. Yet each challenge can cost you money, time and joy if you do not meet it, understand it’s nuances, and conquer it before you sign on the dotted line. In brief, the big 3 challenges are:

  1. The Offering Price  (The Challenge of House-Hunting in the right budget for your financial situation,)
  2. Location of the Home  (The Challenge of House-Hunting in the right area for your family’s needs,)
  3. Condition of the home  (The Challenge of Evaluating the shape, age and wear-and-tear on the architecture, foundation, the wiring, plumbing and appliances of the Home…)

They don’t seem so scary in plain little words. In fact, you probably think they are easy concepts. However, on closer inspection, you will see each challenge brings you a whole series of questions, vocabulary, and definitions. Read on to better understand the financial complexities behind each challenge, as you begin the romantic pursuit of the house of your dreams.  Let’s look at each one individually and examine the secrets within it. You’ll find each of our 3 basic House-Hunting challenges rooted in practicality and good sense which is why your lenders also know them very well.

House-Hunting Challenge Number I: Secrets of the Offering Price

Do you know what the offering price is based upon? Many house hunters mistakenly think they are offering a price simply based on other homes they have toured. You must understand such homes “carry no weight for an appraisal until they close.”

House-Hunting? Check on actual sales,

Check your area for actual sales prices, not just “asking prices” of surrounding houses. There is often quite a difference. That’s why House-Hunting skills require research.  

Therefore, Palm State Mortgage advises you to base your offer on the comparable actual sales in the area. You should not base your offer on what the other sellers of homes in the area are asking.

Doing your homework on offering price means investigating two things:

A. How much did the seller pay? Yes, you will discover the seller’s profit. Also, you will see if values have gone up or down since the seller bought the house.
B. How Much Does the seller owe?

This is a huge issue. If the seller owes more than the house is worth, the seller might have to bring cash to closing. This tells you that the seller probably won’t pay your closing costs. That seller is also unlikely to pay for repairs. That seller is in a little financial trouble himself. Consider dating another house.

C. Basically, you need to fall in love with a house that has a seller with a lot of equity. If this were a romantic situation, we’d suggest you date around a bit before marrying a house just for its looks.  Curb appeal in houses, like good looks in spouses, is only a surface attraction. Just looking at a house does not tell you the whole story of the seller, its value or its ultimate cost.

Challenge Number 2:  Condition of the Home

A. Ask about estimates for repairs.

You can never count on the age-old custom of deducting the cost of repair from the sales price.  Sellers might have already done that. They adjusted the price according to what a roof, for example, would cost. On the other hand, the seller might just know they can sell the house, as is, like a fixer-upper.

A Special Side Note:

With the advent of online Real Estate information centers, house -hunters have access to a huge amount of data. And some of it is wrong, or incomplete.

CAUTION:  For example, “an online estimate can’t accurately compute value on homes in neighborhoods where the size and configuration are nonconforming. But it can give you a general idea of value in the area. It’s not a substitute for an agent CMA or an appraisal.”

A happy hint here is to find out how long the house has been vacant.  “You might be able to negotiate a discount on the price if the home has been on the market for 90 days or longer. All of this depends on the local real estate, however, and days on the market in, say, a rural area, could quite likely be 360 or more.”

B. You must understand structural issues before you make your offer.

  • For Example, does this house have an ancient roof? 
    Newer roofs last well but beware, especially if you live in Florida.  **Don’t feel badly about requesting the information or asking for repairs before making your offer. Do you know that your lender might even require the repairs before they will give you the loan? And who is going to foot the bill? (Don’t fall hopelessly in love with a house until you know about the roof. This blogger’s match-maker aunt would say that’s comparable to falling hopelessly in love with a man who has no job.)
  • Tell me about the foundation.  A house needs visible means of support.  So, here is the scoop about foundations:  Raised foundations-These boast space under the home.  You can reach plumbing and electrical. Likewise, homes with basements have access to repairs. Slab foundations are more common in newer construction, but that doesn’t mean they are “bad.”  Just check out how you would repair plumbing or electrical problems. This could save you thousands in the future.
  • Here’s a Special Floridian Secret: What was the area like before new homes were constructed?  Did did the builders put up a new subdivision over a wetland area? Are you in love with a house with bad drains or constant dampness?   Don’t let a house break your heart.  If you find one with these issues, you we advise you to move on.
  • The Insulation Situation:  Don’t fall in love with a house until you find out if it can keep you warm in winter or cool in the summer.  Is there good insulation in the walls? How about the puffy stuff in the attic?  The truth is that if you buy a poorly insulated house, the repairs won’t increase the market value very much.  (However, if you are hopelessly in love with the house, you can insulate it later. And that repair will cut down on your utility bills. Again, you might want to date around before marrying a house that can not keep you cool in a Florida summer.)
  • Is that Noise from the Refrigerator? Find out about appliances that have been replaced. The seller also gets gold stars for updating plumbing and electrical situations. If you are too blinded by romance over the house to worry about the noisy Refrigerator,  be aware that a new one will cost you $1,000.00 to $2500.00, and that’s without all the bells and whistles.  When is the last time you bought an appliance?  Likewise, do  you want a gas range instead of the electric one?  Be prepared to jack-hammer that gorgeous tile floor and rebuild the granite topped counters–or marry the house you love, electric “warts” and all.   

This topic has so many details that we ask you to stay tuned for Part II of  House-Hunting Challenges, in which we will teach you all about that famous real estate House-Hunting phrase “location, location, location, and the secrets therein.