This invaluable checklist will make sure you don’t miss any red flags or opportunities
If you’re in the market for a new home, there are a lot of things that you need to keep track of during your home searching journey. Purchasing a home is an endless checklist of questions that both you and your REALTOR® need the answers for so you can ensure you’ve done all your due diligence and are purchasing the right place for you. To make the process a little easier, here are eight essential questions that you and your agent should ask the listing agent at an open house before you can seriously consider buying.
1. When was the roof/hot water tank/plumbing/electrical/etc. last done?
This is an important question to ask, because it will help to give you a good idea of the current condition of the property or building. By keeping a mental record of the maintenance and upgrades that have already been completed, it will allow you to estimate any future or immediate expenses upon ownership. While the listing agent may not know all these answers off the top of their head, it is at least good to ask the agent to follow up with the seller to get the answers. This information may also be obtained from an inspection, the depreciation report, or the property disclosure statement.
2. (If a strata unit) Is there a depreciation report for the building?
If the property that you’re interested is a strata unit such as a condo or townhouse, then you should ask if a recent depreciation report is available to review. It’s important to ask the seller’s agent this question, especially if you need to obtain a mortgage, because you may have more pushback from the lender without one. Furthermore, the depreciation report will provide you with information given by a third party about the state of the building and whether or not the contingency reserve fund (CRF) can keep up with the maintenance and upgrades required over time. It will show a variety of funding models, and estimate when special levies will be necessary and how much will be required of each owner.
3. (If strata) Are there any special levies coming up?
A special levy is an amount of money that needs to be paid by the owners to cover the cost of an upgrade or repair in the building or complex, such as the roof. If there’s a $5,000 bill coming up at the end of the year, you’ll definitely want to know about it. If you know that a special levy has already been approved, then your agent may be able to negotiate that the seller pays for it upon completion.
4. Is there a property disclosure statement available?
A property disclosure statement (PDS) provides a history of the property based on the seller’s knowledge. While not to be fully relied on, the PDS will provide you with a basic background of the history of the property. On this document, the seller will have answered a variety of yes or no questions such as “has there been any history of a leak?” or “has there ever been an insect infestation issue?” to the best of their knowledge. It is a common subject on a real estate contract; however, it is not required for all sellers to complete a property disclosure statement. For example, if a seller has never lived in the property because it is tenanted, then they most likely won’t want to put themselves on the line when it comes to answering questions that they’re not 100% sure about. If there is a PDS available, it typically means that the sellers have lived in the property and are therefore confident in their answers and being held liable for them.
5. Have the sellers bought a home already?
If the sellers have bought a property and need to be out in a week then the dates will be really important to them. You’ll also want to ask this because you’ll want to know whether the sellers are motivated to move or if they’re just testing out the market. This question will allow you to understand where the sellers are at in their own real estate process, and also assist you during the negotiation process to make your offer as attractive as possible so that the seller accepts.
6. Do the sellers have fixed dates in mind?
Following on from #4, before you fall in love with a property, you’ll want to know whether or not it is possible for you to move in, based on your own time frame. For some sellers it is not always about the price, and if you can find out what the preferred dates are for the sellers, you may have an upper hand when it comes to offers. If you’re able to be flexible and accommodate those dates, there have been cases where a seller is willing to accept a lower price for more ideal dates. On the flip side, if your own dates are fixed and don’t work with the sellers’ dates, then you must be willing to make a higher bid to stand a chance of success.
7. Have you received any offers on the property?
If you’re checking out a property and ask this question, the listing agent is going to tell you one of the following: we already have an accepted offer pending subject removal; we’re taking offers on a specific day; we’ve received offers and rejected them; or we’ve received no offers yet. If they have an accepted offer, they’re continuing to show the property with hopes for a backup offer in the case that the current offers collapses. If it’s a new listing, they are likely collecting offers on a specific day at a specific time in the hope of getting multiples offers. You’ll want to know whether you’re competing against no offers or five offers, because it’s likely that your offer will vary based on how many you’re competing against. If the listing has been on the market for a while, you may be lucky enough to be the only offer. However, in this case it’s important to ask if they’ve received any offers in the past and whether or not they’ve rejected them and why.
8. How long has the property been on the market?
A follow-up question to # 7, you’ll want to know how long the property has been on the market, for a couple of reasons. One is because if it’s a new listing, you may want to prepare yourself for a multiple-offer scenario. Alternatively, if the property has been on the market for a long time then you may be able to negotiate the price to your advantage. However, if it’s been on the market for a long time and you’re in a hot market then you may want to ask yourself why that is. Is there a stigma on the house? Is the property overpriced? Proceed with caution.
Buying a home is a lot of work, and it requires a lot of time spent searching for the right property and performing due diligence. For most people, purchasing a home is the largest investment you will ever make. It’s important that you ask the above questions to ensure that you know how to make your offer appealing to a seller. Furthermore, these questions will also make sure that you know exactly what you’re purchasing and are aware of additional costs for things like necessary upgrades that may come up in the near future.