Home Buyer Tips: Asking The Right Questions At Open Houses

When I hold Open Houses I’ve seen all kinds of people come in to take a look around: There’s the curious neighbor, the happy couple who happened to stumble across your Open House sign in the street, and then there’s the people who actually care about buying something soon that’s comparable to the home you’re babysitting. I’m happy to show homes to anyone, because it beats sitting on my behind for hours on end (I actually try to make the time productive  by writing gems like this), but one consistent problem I see is that people who are actually interested in the homes are not asking the right questions. This is, unfortunately, true even when their real estate agents accompany them!

Seeing the home is nice; it’s even a necessary thing to do if you want to buy it! But there’s more to viewing property than meets the eye. Buyers (and their agents) need to think like business people: What are the actual costs of ownership, and are there any legal, or financial, issues that aren’t readily advertised in the listing?

Start with a few probing questions to build your negotiation arsenal:

1) Have there been any offers on the property?This question, depending on the answer, could work against you. If there are competing offers in for consideration (even if you don’t know the bid prices) it tends to make buyers jumpy, emotional, and prone to falling into the trap of overpaying. However, if there are no offers on the table, it means you can take your time, and evaluate the listing price to see if there’s reasonable room to place a lower offer.

2) How long has the home been on the market? The longer a property has been on the market the better chance you have at having a lower-than-list offer be accepted. Any asset sells when price meets market value, so the implicit message behind a home sitting on the market for too long is that it is priced too high. Your Realtor should be able to tell you the local Days On Market (DOM) statistics, so you can figure out how your target property fares.

3) Has the house been in escrow? If the answer is yes, then you’ll want to find out why the previous deal(s) fell apart. There could be issues with the property being eligible for traditional financing, or there could be issues with the property that are not included in the listing. Do your homework!

4) Why is the owner selling? The holy grail of home buying is finding the little old lady who is so far removed from market reality, bought her home for 10% of its current value, and is looking to sell immediately. That’s not the likely scenario, but it’s relatively common to come across couple divorcing, owners who have lost their jobs, or any number of other personal reasons for why a seller might need to close ASAP.

5) Are there any liens on the property? In this age of financial distress, it’s increasingly common to come across homes that have liens against them. You need to make sure that the home your purchasing doesn’t have financial judgments against it that you’ll inherit if you buy. Ask up front before you get into escrow and find out from your Title rep.

Buying real estate isn’t the easiest thing in the world, but it’s not rocket science either. Make sure you walk into Open Houses, offers, escrow, and closing well armed with the information you need to make the best decisions. We’re always here to help if you have questions with any of this material.